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Gold Advances in London as Indian Jewelers Return to the Market
Aug. 16 (Bloomberg) -- Gold gained for the first day in five in
London on increased buying from jewelers in India, the world's
biggest market for gold jewelry.

Indian jewelers are purchasing more of the metal in the run-up to the
country's wedding season and also prior to religious festivals, said
Ross Norman, a director of TheBullionDesk.com. Global demand fell 16
percent in the second quarter as price swings discouraged purchases
by jewelers, the biggest buyers of bullion, the producer-funded World
Gold Council said today.

``The physical buyers are coming back to the market,'' Norman said.
``Physical buying is important because it's underpinning the
market.''

Gold for immediate delivery in London gained $1.35, or 0.2 percent,
to $626.15 as of 12:26 p.m. local time. Bullion has gained 4o percent
in the past year.

Global gold demand dropped to 801.6 metric tons from 959.8 tons a
year earlier, the London-based World Gold Council said in a
statement. That was the third straight quarterly decline, and the
lowest level of demand since the third quarter of 2004. Jewelry
demand fell 24 percent to 562.5 tons, a three-year low.

Gold's price swings in the period were the most for the second
quarter since 1982, according to Bloomberg data. The metal climbed to
a 26-year high in New York on May 12 and then plunged by one-quarter
a month later. Buying in India fell 38 percent, and Indian jewelry
usage slumped 43 percent.

``If the price is moving around, people in India will be nervous and
just won't want to buy,'' Jill Leyland, economic adviser to the Gold
Council, said in an interview in London yesterday. ``It doesn't
matter how high or low the price. The important thing is that it's
perceived to be stable,'' she added.

``The second half is typically the stronger half of the year for
gold,'' Norman said.

A pick-up in jewelry demand in the second half is ``critical'' to
sending gold prices higher for a sixth straight year, Citigroup Inc.
said in an Aug. 9 report.

Among other precious metals for immediate delivery in London, silver
dropped 4 cents to $12.12 an ounce, platinum gained 50 cents to
$1,230.50 while palladium climbed $6 to $327.



To contact the reporters on this story:
Danielle Rossingh in London [e-mail];
Claudia Carpenter in London at [e-mail]