Demand slows ahead of gold-buying festival
Wednesday, 07 May 2008

REUTERS, MUMBAI - India's gold demand slowed down on Tuesday ahead of the Akshaya Tritiya festival as prices hardened, denting the appetite of buyers, dealers said.

"Demand is non-existent... possibly because of the higher levels," said one dealer in a large private bank in Mumbai. Gold drew overseas investors to its anti-inflationary appeal, inching up in tandem with crude oil that hovered near a record high on supply concerns.

A weaker dollar also pushed gold as it generally has as inverse relationship with the metal with the two competing for investors' wealth.

In the local market, hopes for a break below 11,000 rupees per 10 grams faded, making traders buy small amounts in preparation for the gold-buying festival in the next two days.

An upmarket jeweller, Tanishq -- a division of Titan Industries Ltd -- expected sales to be the same as last year or even higher, based on advance orders before Akshaya Tritiya.

"Demand may be as good as last year, if not better," said V. Govind Raj, vice president -- retail and marketing of Tanishq in Bangalore.

Akshaya Tritiya, that would end on Thursday, would mark the last phase of the gold-buying season and demand is expected to taper off by the end of May.

After that, festivals in September, would usher in the second busy season for precious metals this year.

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