Record Gold Demand In India As Prices Soar

Gold prices are expected to continue to rise as a result of record demand for the precious metal in India.

At this time of year demand starts to rise anyway with festival and wedding season approaching.

But experts say many Indians are investing even more heavily in the metal because they fear even further price increases could be around the corner.

The cost of gold has risen by more than 25% this year alone as global investors steer away from the US dollar and the eurozone's debt crisis.

Jewellers across India say they are selling more bars and coins to people who would rather put their money in gold than in a bank.

Gold trader Mohit Gupta says he has seen a rise in the number of small-time gold investors.

"Gold is always supposed to be the best investment - either for the marriage or for their personal investments - so gold will never lose its shine," he told Sky News.

The Indian economy is growing steadily at around 8% or just below - but inflation is also rising.

Many investors have seen their savings in banks whittled away by a paltry return of 4%. Gold, on the other hand, delivers much more, for now at least.

Gold buyer Chanda Singh, who was looking for jewellery for her niece's wedding, believed gold would always be a sound investment despite booming demand and stratospheric prices.

"It is natural for prices to go up or down but this does not matter for us. In marriages and festivals we all buy gold. It is important to us."

For Indians gold is not only an investment, it is also a sacred metal and a symbol of purity and wealth.

The country imports and consumes more gold than any other nation in the world.

And with a population of 1.2 billion, India alone can drive the price upwards.

Analysts say as the country continues to get richer, its love affair with gold will become even stronger and the price of the yellow stuff will soar even higher.