Jewellers sell scrap gold after bullion hits one-month high

By Lewa Pardomuan

LONDON (Reuters) - Jewellers sold more scrap gold to dealers and trade houses on Thursday after bullion rallied to its highest level in more than a month.

But industry buying, notably by the electronics sector, remained steady.

Gold rallied to its highest level since April 18 at $935.30 an ounce as record high oil raised fears of inflation and spurred buying from speculators. But sales from jewellers capped gains and investors also started to book profits.

Gold later dropped from late New York levels to around $923 an ounce by 1201 GMT but it was still well above a four-month low of $845 an ounce hit in early May.

While physical trading was muted in Europe, dealers in Asia and the Middle East noted sales from jewellers. Purchases also slowed in India, the world's main consumer, due to the absence of major religious festivals.

"It's pretty dead at the moment but we've seen good physical demand in the last few weeks," said Beh Hsia Wah, a dealer at United Overseas Bank in Singapore.

"Gold may try $940 before it comes down again," said Wah, adding that selling from Indonesia, which is Southeast Asia's largest consumer, began to pick up.

Gold bars were quoted at a premium of between 60 and 80 U.S. cents an ounce against the spot London price in Singapore, little changed from last week .