The biggest slump in gold prices in three decades is poised to revive jewelry demand among Indian housewives and brides before the wedding and festival seasons, according to Gitanjali Gems Ltd (GITG). and Rajesh Exports Ltd. (RJEX)

Bullion tumbled 9.1 percent yesterday, the biggest loss since 1983, and that may make the precious metal more affordable to Indians, said Mehul Choksi, chief executive officer of Gitanjali, the nation's biggest retailer of jewelry and diamonds by sales. The plunge has already revived interest among retail buyers, said Rajesh Mehta, chairman of Rajesh Exports Ltd.

Gold, which entered a bear market last week, has lost 17 percent this year after rallying for 12 straight years as optimism that a U.S. recovery will curb the need for stimulus cut demand for protection of wealth. Falling prices may discourage speculators and help India, the world's biggest consumer, curb a record current-account deficit, according to Ambit Capital Pvt.

"The season is very hot for buying" with weddings and other auspicious dates coming up, Choksi said. "The decline will be positive for jewelry as there will be a pick-up in demand because affordability will increase. Volumes will increase."

Gold is bought during festivals and marriages as part of the bridal trousseau or gifted in the form of jewelry by relatives. The festival season in India runs from August to October followed by the wedding season from November to December and from late March through early May.

David Fuller's view Gold is a long-term store of wealth but an imperfect medium-term hedge.

I think Indians have a good perspective on gold and it is logical to like it more in the $1300 to $1400 range today, than above $1800 in 2011.

However, people living in India will understandably be more interested in gold's long-term performance against the rupee (historic & 10-year). It encountered resistance beneath R100,000, broke initial support on the move below R90,000 and has seen a climactic decline recently.

Interestingly, India's stock market (daily & weekly) had an upward dynamic today, following a small upside key day reversal on Monday. Although these do not combine to show a significant move on the weekly chart, they did occur above lateral trading near 18,000 which has some psychological significance given the number of times it has been tested in recent years. Declines in gold and the price of Brent crude oil were cited as reasons for the stock market's firmer tone.