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Gold demand set to soar in India

Hindu festivals are likely to have a considerable impact upon demand for gold in India, experts have clamed.

The festival season gets underway on August 28th, when brothers and sisters celebrate the Rakhi festival. Indians will celebrate several more festivals in the following weeks and months, many of which are associated with the purchase of gold.

Significantly, analysts have told Reuters that gold prices could rise above $700 an ounce in the coming quarter, up from the current level of $670.

Anindya Banerji, an analyst with IL&FS Investsmart India, suggested that a 26-year-high of $732 could be put under threat by the end of the year, which was last reached on May 12th last year.

"Gold is expected to strengthen in the next eight to ten weeks because of financial market turmoil. This always spurs investment demand in gold," he said.

Despite this, analysts do not expect demand for gold jewelry to diminish, such is the importance of the precious metal to the Hindu religion and Indian culture.

Indeed, demand from those hoping to buy gold jewelry is one of the reasons that prices are expected to rise, but demand will primarily come from investors, according to Reuters.

Speaking to Bloomberg recently, Pierre Lassonde, vice chairman of Newmont Mining, claimed that "gold's time is coming", adding that the price of gold could soar above $1,000 an ounce due to the weak dollar.


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