© 2010 AFP - Hopes of bumper gold sales for an Indian festival this weekend viewed as auspicious for buying the yellow metal look set to be dashed by record-high prices, industry figures said Saturday 15 May.

Photo: AFP

India is the world's biggest importer and consumer of the precious metal but fears about financial turmoil in the eurozone have pushed the price of gold to an all-time peak, deterring buyers.

Demand for gold traditionally leaps in India for the Akshay Tritiya festival, which falls this year on Sunday 16 May, as India's nearly 900 million Hindus believe it to be a lucky day to purchase gold jewellery and gold coins.

"But this is a very bad year with gold prices at record highs," Suresh Hundia, head of the Bombay Bullion Association, told AFP.

The day looks like it will be "a very, very big flop, going by the trends," he said.

"People are lining to sell old gold jewellery, not to purchase it," Hundia said in a telephone interview.

Hindus traditionally believe they can get lasting prosperity and good luck by buying precious metals on Akshay Tritiya, which in Sanskrit means "never diminishing" and is celebrated throughout India.

But "instead of buying, what we have is customers who are scrapping their old gold jewellery and turning it into new jewellery," Hundia said.

Last year sales of gold for the festival totalled around 40 tonnes but Hundia said sales could decline by more than 50 percent this time.

"Nothing is selling," Daman Prakash Rathod, director at MNC Bullion, told India's Business Standard daily.

The next big gold purchasing festival, Dhanteras, falls in November.

Gold of 99.95 percent purity hit an all-time high of 18,325 rupees (405 dollars) per 10 grams in Mumbai on Friday 14 May.

Abroad, gold prices smashed their way to fresh record highs of 1,249.40 dollars an ounce on Friday 14 May, with demand driven by investors seeking shelter from the eurozone debt crisis.

The weeks leading up to Akshaya Tritiya used to be the most lucrative for jewellers with consumers considering it a good time to purchase gold.

"We are seeing fewer buyers than we do normally but maybe we will see more people come in tomorrow (Sunday 16 May)," said Ravi Chakravorty, an employee at a jewellery store in downtown New Delhi.

"They may buy something (gold that is) small because it's a special day," he said.

India's production of the precious metal is a scant 3.5 tonnes.

It imported 578 tonnes last year, which was 18 percent less than the previous year, according to industry figures, and Hundia said poor festival demand could signal gold imports this year might be even lower than in 2009.

The country of nearly 1.2 billion people is believed to have one of the world's biggest private gold hoards estimated at up to 15,000 tonnes.

Traders say many Indians who purchase gold for weddings and other festive occasions and also as stores of wealth are hoping to buy more gold once prices come down, although they add they may face a long wait.NEW DELHI, May 15, 2010 (AFP)