Gold prices are soaring to new heights but who is buying. It seems nobody is interested in gold at least in India.

If you take note of India's import data for April and May months, the quantity of gold imported to the country has come down heavily.

Reason for this is that Indians are now shying away from buying gold as it has become very costly.

Imports of gold have halved to 17 tonnes in May from 34 tonnes in April. Indians are now becoming price-sensitive to gold unlike in the past when demand continued to be strong despite rising prices.

India imports 97% of its gold requirement annually, and a stronger rupee makes imported gold cheaper.

Although jewellery demand is typically price inelastic, the run-up in prices has begun to hurt consumption. RBI's 200 tonnes purchase of gold from the International Monetary Fund (IMF) last year has helped fuel perception of gold as a reliable asset class and supported investment demand for gold.

India is one of the largest consumers of gold globally, with total demand at 480 tonnes in 2009. However, higher prices have hurt consumption last year. Jewellery demand accounts for a substantial portion of total demand (75%); although gold is becoming an attractive investment class as well.

Since there were not many marriages and there were no major festivals (besides Akshaya Tritiya on May 16) during the period, there was no significant demand on account of spiraling prices.

Meanwhile, gold futures on the COMEX Division of the New York Mercantile Exchange ended lower on Wednesday on a worse-than-expected report on sales of new homes as well as strengthened dollar. Silver and platinum both climbed.

The most active gold contract for August delivery fell 6.0 dollars, or 0.5 percent, to finish at 1,234.8 US dollars.

The commerce department said in a report on Wednesday that new home sales collapsed a record 33 per cent in May to a seasonally adjusted annual rate of 300,000, the lowest level since records began in 1963, which was much worse than the 19 percent decline projected by economists and suggested that potential consumers stopped purchasing new homes after a federal subsidy for home buyers expired. Stocks market and gold price dropped quickly on the news.