NEW DELHI -- India's gold demand may hit a record 1,000 tons this financial year amid growing rural incomes following another year of plentiful monsoon rains that helped the agricultural sector, but that may not necessarily mean a surge in demand during the October-December festival season as has been the case in previous years.

This signals the maturity of a market that was once largely tied to demand during specific festivals, but growing awareness about global trends have meant investors are looking more towards price signals than seasons now to make their buying decisions.

"People don't want to wait any more for the festival season. They are buying whenever prices are low, and plan to take delivery on auspicious days," said Prithviraj Kothari, president of the Bombay Bullion Association.

The daily demand for gold in the key trading hub of Mumbai has halved to 300 kilograms from three days ago after prices edged up, although the auspicious day of "Sharad Poornima" fell Tuesday, he said.

Spot gold prices in India were quoting around 27,000 rupees ($552.1)/10 grams, while international prices at 0525 GMT were $1,679.70/oz.

Mr. Kothari said the October-November festival season sales would be on par or just below last year's level of 65-70 metric tons, but total sales during the fiscal year that began April 1 should reach 1,000 tons or more because an "excellent" monsoon would boost farm incomes.

Rows of gold jewelry shops in New Delhi's Karol Bagh area were still half-empty almost a fortnight into the usually busy festival season period, though business volumes were slowly picking up.

"You never know whether prices will jump even higher. So we are buying, as we have a marriage in the family next month," said Anamika Sharma, a housewife from New Delhi, as she tried out an assortment of rings and necklaces.

Some investors were still buying although many have been spooked by a fall from highs of $1,920/oz on Sept. 6.

"Like it or not, but gold is still a safe haven," said Vinod Jain, a businessman who had come out in the middle of a work day to buy plain gold jewelry. "Plunging share markets have only strengthened my interest in gold."

More than urban consumers, rural buyers were more often walking into jeweler shops with wads of cash after a bumper crop.

"We are certainly seeing more demand from rural areas, who have disposable incomes," said Balrram Garg, managing director of PC Jeweller Private Ltd.

Jewelers have also launched prize draws offering luxury cars and television sets to woo more customers. Traders expect demand to pick up around Diwali, the Hindu festival of lights on Oct. 26, considered the most auspicious period for buying gold.

"Last-minute buying is bound to happen around Diwali, but volumes will really strengthen if prices fall to around 25,000 rupees/10 grams," said Suresh Hundia, former president of the Bombay Bullion Association.

Write to Biman Mukherji at [email protected] and Rajesh Roy at [email protected]

Source: http://online.wsj.com/article/SB10001424052970203499704576624561825408264.html