"Business is good, we're selling very well. Lots of people are coming to buy compared with a week ago," trader Lim Leang said. He said his sales were up to between 10 and 20 damlang a day, compared with two to three a day earlier last month.

A damlang, or 37.5 grams, is now at $343 compared with $347 last week, traders said. The price was $348 in the middle of March. Traders said their selling price was now $280 an ounce, unchanged from last week but down from $295 the previous week.

The softer prices came ahead of the mid-April traditional new year holiday, one of two annual festivals when people like to buy gold jewellery, the traders said.

"When the price of gold is down and, at the same time, we get the Khmer New Year, then many people come to buy," said another seller in one of the city's two main gold markets.

"When gold is cheaper, goldsmiths like to buy andmake things for customers in the provinces," a third seller said. "My business is up 30 per cent over the last month."

But another seller said the poor economy was still hurting overall sales. The Cambodian economy saw growth stall to zero last year on political turmoil and the regional crisis.

The trader said the only buyers were those people from the countryside who had enjoyed good harvests. "Most people buying are from the countryside, without them we would have no one to sell to," she said.

Phnom Penh's gold sellers said the security situation for them had improved in recent weeks after a rash of kidnappings. "Security is better now compared with a couple of months ago," one of the sellers said.

Guards with automatic rifles stood by on last Sunday while small groups of shoppers, many of them young women from the countryside, checked out necklaces and bracelets.

Authorities say they are halting a surge in kidnapping which began last year. Many of the victims have been ethnic Chinese businesspeople, including gold sellers.

Several military police and soldiers have been arrested on kidnapping charges in recent weeks.