India's gold bonds seen luring investors in search of safe haven

The second tranche of India's sovereign gold bonds, whose sale began on Monday, is likely to draw good response from investors, as they are priced below market rates for the metal and sharemarket turmoil spurs investors to diversify holdings.

India plans to sell 150 billion rupees ($2.22 billion) in gold bonds in the fiscal year ending on March 31, as it seeks to wean investors off physical gold and contain the outflow of foreign exchange spent on imports.

The price of gold has risen 4% so far in 2016, while India's benchmark has fallen nearly 7%.

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