India's monthly gold imports are set to rise by as much 50 per cent from current levels while premiums could almost double as the country gears up for a surge in demand ahead of the year-end festivities and wedding season, industry sources said.

More purchases by the world's No.2 gold consumer after China could help support global bullion prices, which are mired near an 8-1/2-month low of $1,216.01 per ounce amid fears a faster hike in U.S. interest rates would dent its appeal as a hedge against inflation.

"Gold imports are expected to rise to about 70-75 tonnes per month in the coming months as against a monthly average of 50-60 tonnes," said Prithviraj Kothari, vice-president of the India Bullion & Jewellers' Association.

Indians traditionally believe that buying and giving gold on holy days brings good fortune, a sentiment that drives up demand ahead of festivals, and this year there is the added lure of weak prices, traders said.

Gold futures in the country are trading at 26,734 rupees ($437.58) per 10 grams, down over 10 percent on the year.

Gold sales are expected to rise by 15 per cent to 20 per cent this festive season from year-ago levels, said Bachhraj Bamalwa, director of the All India Gems and Jewellery Trade Federation.

Next month Indians will celebrate Dhanteras, associated with Lakshmi - the goddess of wealth, when buying gold is considered auspicious, followed by the festival of lights Diwali and then the wedding season that will extend into early next year.

But the stronger demand could squeeze supplies in the domestic market and push up local prices.

"In the short-term, gold prices are expected to rise to 28,500 rupees per 10 grams," said Kothari.

Indian gold premiums to the global benchmark are also expected to jump to about $12-$15 an ounce, from the current $7-$10 an ounce, industry officials said.

Total 2014 imports are, however, likely to fall to about 700-750 tonnes from 900 tonnes a year ago because of thin arrivals earlier this year, said Kothari, helping to keep a lid on the country's current account deficit.

Last year, a ballooning deficit prompted India to put curbs on gold imports, including a 10 per cent duty. While the government has allowed private jewellery exporters to import again, it is reluctant to lower the duty.

Jewellery forms a big part of Indian gold demand, accounting for about 75 percent of the total in the second quarter, World Gold Council data showed. India's investment demand for gold slumped 67 per cent on year in the June quarter.

"The likely rise in demand is not expected to hurt the country's deficit because gold imports are under control and international prices are also lower," said Kothari.

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