Gold imports by India, the world's top consumer, plunged 56% to 125 tonnes in the fourth quarter, cutting full year imports by 8.4% as record high prices and high interest rates hit demand.

Mr Prithviraj Kothari president of Bombay Bullion Association in an interview said that India, whose appetite for gold dates back centuries, imported about 878 tonnes of gold in 2011, down from 958 tonnes in 2010.

The World Gold Council said in November that for the fourth quarter it expected the world's second most populous country to buy more than the 281 tonnes it bought in the same period a year ago, taking total imports over 1,000 tonnes.

The October to December quarter covers the peak festival and wedding season, when Indians traditionally splurge on gold jewellery and investments. It is rare for gold demand in the last quarter to remain below third quarter consumption.

Indian gold prices hit a record high of INR 29,516 per 10 grams on November 15. International gold prices touched an all-time high of USD 1,920.3 per ounce in September.

In local currency terms, the price of gold jumped 32% in 2011, tracking firmness in the world market and taking into account a 16% drop in the value of the rupee.
One reason behind the weak demand in the last quarter of the year was the increase in purchases during the first nine months, when many Indians snapped up gold bars and coins, hoping that prices would rally further.

(Sourced from Reuters)