Observers said that the market has just finished its peak season which generally starts off in the beginning of January and continues well up to the middle of August.

According to them the market this year was comparatively poor in terms of gold purchase compared to the previous year. "It was a poor year due to various reasons. First, there was a constant fear of a government fall. Secondly, the general elections were announced, but to top it was the Kargil war," sources said.

Anil Auddy, joint secretary of the Bullion Merchants' Association said that the international prices have left no impact on the local market. "There is no effect on the local market because there are no investors. They have moved away from the bullion market as there is hardly any appreciation in thegold prices during the last couple of years," Auddy said.

He also felt that the investors are moving over to the share market despite the gloom in the bourses. "They are attracted towards to the blue chips because there is appreciation of their investments. Moreover, they are preferring different investments schemes like the National Savings Certificates and the Kishan Vikas Patras," Auddy added.

The recently concluded peak season has not helped the market in anyway. "During this period from January to August, the offtake of gold jewellery increases but, again, it is nothing like the past. The prices varied from Rs 48,000 to Rs 46,000 for the 116 gram bars and the jewellery purchases were more or less the same. The next four months will be poor. The pujas, even traditionally, is not the season for the gold ornaments," the member said.

However, the picture painted by the market operators is totally in contrast with the views of the World Gold Council (WGC), which has identified a 6 per cent rise in thegold demand during the second quarter of 1999.

The recently published Gold Demand Trends from the council noted that during the second quarter the Indian gold market witnessed 6 per cent higher demand compared to the corresponding period of the previous year. The demand in the second quarter of 1999 was 218.4 tonne against 206.8 tonne of the previous year. However, the total demand for the first half of 1999 was 414.4 tonne against 459.2 tonne, registering a fall of 10 per cent.

The report cites recovery in the Indian economy and high rural incomes as the key factors that lead to the revival of the demand. Auddy, however, held a different view.

"As far as West Bengal is concerned the farmer did not get a remunerative price for jute and potatoes and this left a negative impact on the local bullion markets," he said.