``There is always an element of delayed impact in India and prices will correct next week,'' said deputy general manager,MR Nayak, at Corporation Bank, a leading gold importer. The drop in international prices has come at a time of seasonal demand in the world's largest gold consuming country.``This time is usually one of the good seasons for gold demand. I expect more demand to come in at lower levels,'' Nayak said. Standard gold ended on Saturday at Rs 4,400 ($ 103) per ten grams, down 10 after losing Rs 50 on the previous day. Friday's announcement that Britain would slash gold reserves from 715 tonnes to 300 tonnes in the next few years puts the country among a growing band who have opted to cut holdings.In London, spot gold ended at $282.0/$82.70 a troy ounce, off the day's low, but still $7 below Thursday's US close.

Britain said the gold it planned to sell would be replaced by foreign currency assets, split roughly 40 per cent in US dollars, 40 per cent in euros, and 20 per cent in yen. Indian analysts said they expected increased sales by central banks across the world to have little impact in a country where gold last year topped the list of imports.

India's official gold imports were 614 tonnes worth $5.8 billion in calendar 1998, up from 526 tonnes worth $5.7 billion in the previous year, World Gold Council data shows. `The only effect that the gold sale plan will have in India is on the price front,'' said Nayan Pansare, group financial controller of the Bombay-based Inter Gold (India) Ltd.

Gold is the preferred investment in largely rural India and is popular as a gift at weddings and festivals. Commentators said it could take some time for people to realise that the yellow metal wasdeclining in value.As of April 29, RBI held $2.91 billion of its reserves in gold out of total reserves of $32.54 billion.