Is the price of gold, which has hit an all-time high, set for a crash? On Tuesday, bear fever gripped the gold market as traders and dealers said that they are expecting a crash in the prices of gold in the Indian bullion market.

Gold had hit an all-time high of Rs 11,492 on the Multi Commodity Exchange, the largest commodity bourse. The gold contract has gone up more than 7 per cent so far in 2008.

Traders said the demand  for gold is dull, as many people are expecting that the prices will come down.

Overseas gold touched an all-time high of $914 an ounce on Monday on investor buying driven by the dollar's slide and financial market turmoil.

Bombay Bullion Association said that India's imports of gold in calendar year 2007 could have fallen by 20 percent due to a surge in prices. In 2006, India, the world's largest consumer of the precious metal, imported about 715 tonnes of gold.

The country consumes anywhere between 600 to 700 tonnes of gold worth $6-7 billion annually. But domestic production of gold is only about 2 tonnes per annum. The consultancy said the net gold de-hedging in the second half of 2007 will be between 1.5 million and 2.5 million oz globally.

And, who usurps all this gold in India. Mainly the gems and jewellery industry, which is competitive in the world market due to its low cost of production and availability of skilled labour. In addition, the industry has a worldwide distribution network, which has been established over a period of time.

The strengthening of rupee against US dollar and rising consumer spending have raised India's gold demand by as much as 72 per cent in the first half of the last year. A report from the World Gold Council says demand for gold in India reached an all-time high of 317 tonnes in the second quarter of 2007. The figures are nearly double of what was sold in 2006 and equal to half the global mined output for the same period. Of this, only 10-15 per cent was recycled gold, indicating strong demand for fresh imports.

Latest reports say India has emerged as the fourth-largest merchandise gold export market for Australia in 2006-07. Gold exports comprise nearly half of all merchandise exports to India from Australia, says a report from the Australia India Business Council. It said in 2006-07 India was Australia's largest market for gold, second-largest market for coal and copper ore, and third-largest market for wool. Australia has also agreed to allow the export of uranium to India, subject to strict conditions. Australian exports to India rose 37 per cent in 2006-07 as against 22 per cent in 2005-06. Last year, merchandise exports from Australia to India were worth AU$10.1 billion, up AU$2.7 billion.