Gold demand in India is booming as retail consumers in the yellow metal's biggest importer return to the market after a 20 per cent fall in the price of bullion.

The arrival of the festival season in India - when it is traditional to buy the precious metal - is helping demand rebound sharply after a lacklustre start to the year, but traders said a similar trend was emerging in Turkey and Abu Dhabi, supported by the fall in prices.

The surge, after global retail demand fell 18 per cent in the first six months of 2008, is helping to sustain gold prices at about $800 an ounce in spite of the strength of the dollar, which traditionally hurts precious metal prices.

Traders said that bullion imports in Abu Dhabi - a key Middle East gold hub - surged 300 per cent in August compared with the same month last year. Turkey saw the highest ever monthly imports last month, while the past five weeks have seen the busiest gold demand from India in 20 years.

Continued at Financial Times