KOCHI (Commodity Online): Jewellers in Kerala and Gujarat are wondering why customers are not coming to their shops even on the festival days. In normal circumstances festival days witness a huge rush to buy gold in India.

But, that is not the case this year. The reason for people shying away from buying gold is the high prices.

Because of the rise in prices, jewellers are having a tough time selling gold necklaces, biscuits or bars. The yellow metal has risen nearly 20% in the last one year to Rs15,595 per 10 gm, up from Rs13,025.

Between June and September 2009, people bought 22% less gold jewellery than they did in the same period last year. The number of coins and bars sold is down 36%.

During the four months, Indians bought 404 tonnes of gold jewellery against 518 tonnes in June-September 2008.

Only China bucked the trend. Jewellery demand in China went up by 6% compared to a year ago.

Will the festive season change things for the better? Market analysts say the coming festivals like Diwali may just help the jewellers to dispose of their stocks.

However, people are buying less grammage due to the spike in prices. Budgets have not changed, but for the same amount people are getting less. To push sales, several jewellers are trying promotions and lightweight jewellery that seems heavier.

During Dussehra and Diwali there will be auspicious purchases and even wedding buying as people still have a lot of confidence in gold.

Experts say prices are likely to rise. Jewellers are increasing promotions and special offers where one can book gold now and take delivery on Diwali. The World Gold Council has launched a campaign called the Great Indian Gold Rush that will offer total prizes of 1,490 gm of gold.

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