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India's festive gold buying spree continues, defying record cost

Indian buyers of gold brushed off record high rates and made purchases for the Dhanteras and Diwali celebrations starting on Tuesday, hoping bullion would continue to rally and provide appealing returns amidst a cooling stock market, market officials told Reuters.

Robust need on the planet's second-biggest gold consumer could further support global prices, which hit record highs recently. Increasing need for imports of gold could likewise widen India's trade deficit and put pressure on the rupee .

People are still into gold big time, even with rates at record highs throughout Dhanteras. With gold giving much better returns than the stock market, there's been solid demand for coins and bars, said Saurabh Gadgil, chairman of PNG Jewellers.

Indians were commemorating Dhanteras on Tuesday, a day thought about auspicious for buying gold and one of the busiest gold-buying days in India.

Regional gold rates jumped to a record high of 78,919 rupees per 10 grams recently, marking an increase of more than 31% given that in 2015's Diwali. India's NSE Nifty 50 share index has dropped about 7% from a record high hit on Sept. 27.

Investors are working to diversify their portfolios by adding to or increasing their allowances in gold and silver, Gadgil said.

In value terms, turnover during this year's Dhanteras is anticipated to be considerably higher than last year due to higher costs. In volume terms, it might be slightly lower or around the very same level as in 2015, Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA), said.

Indian dealers on Tuesday charged a premium << XAU-IN-PREM > of approximately $1 an ounce over official domestic prices-- inclusive of 6% import and 3% sales levies, up from the last week's discount of $4.

Regional silver futures hit a record high of 100,081 rupees per kg recently.

Demand for silver coins and bars was strong today, as silver has delivered much better returns than gold in current months, said Chirag Thakkar, CEO of Amrapali Group Gujarat, a leading silver importer.

(source: Reuters)