LONDON, Feb 1: Record gold prices have scared buyers in many parts of the world and left them to watch helplessly the blistering rally that shows no signs of abating.

But sales of gold have surged as consumers take advantage of the high price, which has doubled in just two years.

Spot gold hit a lifetime high of $936.50 an ounce on Friday.

Traders say gold demand in India, the world’s top bullion consumer, has been sluggish, Japanese retail buyers have turned into heavy sellers, jewellery demand in South America has slumped and Chinese retailers have cut stocks.

Physical traders in Germany report slow buying, while Switzerland has witnessed heavy inflows of gold scrap for refining. Holders in Indonesia and Hong Kong have been selling scrap gold.

Analysts in India said the marriage season -- which generally boosts buying as parents prefer to give gold to brides for financial security -- has failed to lift purchases as buyers are not comfortable with heightened price volatility.

Some industry estimates suggest Indian gold imports might slip by 25 per cent from 2007 to around 600 tons this year. The country imports about two-thirds of its annual gold demand, while the gap is met by recycling of the metal and local output.

The price is too high. They (Indians) won’t buy gold, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

N. Prasad, bullion analyst at Safetrade Advisors in India, said physical demand in the country was sluggish because of high prices and it would take time for buyers to adjust.

The marriage season is going on in India, so they can only postpone buying, but not cancel. Demand in the first quarter should not be as high as in the same period last year, as when prices rise, people reduce their budgets, he said.

The picture in the rest of the world was also not bright.

I believe that in large part, the jewellery demand in North America is certainly slumpy, said Jon Nadler, senior analyst at Kitco Bullion Dealers in Montreal.—Reuters