Demand for gold in India, the world's largest consumer, has been low this festival season because of firm prices which hit 16-year highs this week with the weakening of the dollar, traders said onTYiesday.

The season, which begins in August and ends in November, generally fuels buying of gold jewellery and coins, but high prices have forced many people to postpone their purchases or shift to consumer goods, they said.

Jewellery accounts for about 85 percent of Indian gold demand.

"There is so much of a rush for consumer goods that people have no place to stand in those shops. But jewellery stores have enough space for people to sleep," said Ranjeeth Rathod, a bullion dealer based in the southern city of Madras.

He said gold demand in Madras had fallen to about 100 kg a day from an average of 250 to 300 kg. Bullion traders in Bombay, the country’s financial capital, said demand was hardly 20 percent of the 450-50^ kg generally seen during the festival season.