Gold demand in India during the upcoming festive season is likely to remain robust, as the substantial reduction in import duty has made prices appealing, providing comfort to retail consumers and encouraging purchases, industry officials said.

Higher demand in the world's second-largest gold consumer could support a rally in global prices, which hit a record high last week. But higher demand for gold imports could increase India's trade deficit and weigh on the rupee.

"The primary beneficiaries of the reduced duty cut will be retail consumers," said Sachin Jain, CEO of the World Gold Council's Indian operations.

India slashed import duties on gold in July to 6% from 15%, a step aimed at tackling smuggling.

Demand during the upcoming festival season will be very strong, Jain told Reuters on the sidelines of the India Gold Conference.

Gold demand in India usually strengthens towards the end of the year, which coincides with the traditional wedding season and major festivals including Diwali and Dusherra, when bullion buying is considered auspicious.

Retail demand has improved since the duty cut brought down prices and this momentum seems likely to continue in the coming months, said Ajoy Chawla, CEO of Jewellery division at Titan

Global prices hit a record high last week, but in India, domestic prices were around 71,800 rupees per 10 grams on Monday, below a record high of 74,731 rupees hit in July.

The duty cut changed sentiment among retail consumers, which were postponing purchases because of the price rise, Asher O, managing director of India Operations at Malabar Gold and Diamonds.

Gold prices could have hit a new record high above 80,000 rupees without the duty cut, but now they are trading below the peak, which is likely to increase demand from the next month's Onam festival, said Asher.