Gold imports into India, the world's largest consumer, remained almost stagnant for the second straight week as high prices hit demand and brought domestic sellers to the market, traders said.
"Jewellers have switched over to scrap material which is cheaper than imports and abundant in supply," said Suresh Hundia, president of the Bombay Bullion Association.
Traders said India's gold imports halved to about 267 tonnes in 2002 from the previous year, and could fall further this year.
Spot gold was quoted at $369.50/370.25 an ounce at 0955 GMT on Monday in Europe, near six-year highs of $372.60 in late January, as investor fears over a possible war in Iraq underpinned the safe-haven metal.
Gold is up about 33 per cent since this time last year, helped by spiking oil prices, a weak dollar and the war concerns.
Local prices follow global trends as India imports more than two-thirds of its gold requirements.
Traders said supply of scrap gold in the Bombay market had risen to about 100 kg a day from a normal 30-35
Some people who had bought gold bars (of 116.64 grams each) at lower prices, has been selling at about Rs 1,000 below the imported price of about Rs 69,400, they said.
"Gold imports will not pick up unless global prices drop by about $10 to $15 an ounce," said Ranjit Rathod, a bullion trader in the southern state of Tamil Nadu.
Jewellery demand
Traders said firm prices dimmed appetite for gold jewellery with sales in the past week falling 60 to 70 per cent from a year earlier.
The only purchases were for marriages while many buyers were selling their old jewellery to part finance the new ornaments, they said.
Gold jewellery demand normally rises in India during the Hindu marriage season, which starts in mid-January and runs through to May, as parents give gold as a dowry gift to provide financial security to their daughters.
