Indian gold demand 'being priced out'

While rising prices have made it a great time to buy gold on financial markets, a reported drop in demand for gold jewelry has been registered in India, on the back of soaring prices.

Demand for wholesale gold in the world's largest market for gold jewelry was claimed to have slipped, as the price of the precious metal consolidated above the local psychological barrier of 10,000 rupees ($250) per ten grams.

Indian sources told Reuters that "last year at this time people were buying even though prices were rising", whereas after recent price hikes, "this time, they are waiting and watching".

National journal the Hindu Business Line said: "At these high levels, there is sure to be some demand compression as Indian consumers are known to be price-conscious."

The Indian market for wholesale gold, destined for the gold jewelry market, is a key driver in global gold demand, with recent months seeing a surge in sales of gold-based products for festival-wear.

While some retailers fear a consumer drop-off thanks to rising prices, others claim that the upcoming festivals of Karva Chauth and Diwali will keep demand flowing.