Sydney - Gold prices can expect a boost from strong physical gold demand in September associated with the Indian wedding and festival season, JPMorgan said Thursday.

"Analysis over the last ten years does indeed demonstrate that much of the annual increase in gold price has been concentrated within the period of September to December, which is a direct correlation with the Indian Wedding and Festival Period," JPMorgan said in a note.

India is the world's biggest consumer of gold.

Gold prices have sagged nearly 20 per cent since the start of July to a nine-month low of USD773.45 a troy ounce, mostly because of a 10 per cent rebound in the U.S. dollar against the euro and a retreat in oil prices from record highs above USD140 barrel.

But physical demand has picked up strongly since prices dropped towards and below the USD800 a troy ounce mark, and some analysts suggest that demand from the fabrication sector could help to put a floor under bullion.

August gold imports into India have already risen 45 per cent over the same month last year to about 100 metric tons, equivalent to about 2.5 per cent of global annual demand.

"Some fabricators have depleted stocks over the past year," said Commodity Analyst David Moore at Commonwealth Bank of Australia.

Many fabricators put off buying gold and ran down inventories after prices climbed to a new record high of USD1,032.35/oz in March, and stayed mostly above USD850/oz since.

Over the last ten years, the price of gold rose an average 3.2 per cent between January and August. But the average increase for the January-to-September period is 8.2 per cent, with September demonstrating the strongest gold price movements of any individual month, JPMorgan said.