For India all that glitters is gold as festival nears

By Biman Mukherji

NEW DELHI (Reuters) - Diamond, ruby and emerald-studded jewelry hangs in rows at a New Delhi shop, but one slim gold chain is all that N.B. Yadav settles for with the price of the metal at multi-year highs.

"My daughter's ring ceremony is just two days away," he says, lingering over the chain. "That is the only reason why I am buying even this piece. We are also getting some old jewelry polished."

It was only two weeks to the most auspicious Hindu festival of Diwali, but with gold prices at a 28-year-high above $775 an ounce only a handful of customers are attracted to the hundreds of jewelry shops packed in New Delhi's Karol Bagh market.

"Usually, I like to buy something during Diwali for my daughters, which is why I am here " said Harish Aggarwal, a New Delhi-based businessman. "But at these prices, I really should be selling some of my jewelry."

As India is the world's biggest importer of gold, analysts keep a close eye on the country's consumption for hints at the future price of bullion. Last year the country imported 715 metric tons of gold, including 207 metric tons during the festival buying period.

Indian imports to August were nearly double the same period the previous year, but a jump in prices since September has led market watchers to trim their import forecasts for the whole year to 800 metric tons, still a record, from about 1,000 metric tons.

"Whoever wants to buy, will buy anyhow. I would buy the same amount, even if prices were low," said Pawan Kumar, a New Delhi-based businessman. "Of course, I only wear this gold ring, and the rest all goes to my wife."

Indians consider it auspicious to buy gold for their households during Diwali when the goddess of wealth, Lakshmi, is worshipped. It is also bought for other festivals such as Durga Puja and Ganesh Chaturthi, celebrated ahead of Diwali.