Forecast of normal monsoon and a good harvest will boost the purchasing power of gold among farmers in India, said a report from the leading Asian investment bank, HSBC.

"Good rains forebode a good harvest that will boost agricultural income, helping farmers to buy more gold this year," said HSBC's James Steel.

India is the world's biggest gold consumer and farmers account for bulk of gold purchases in the country.

The meteorological department in India has predicted that there will be normal monsoon rains next month that will result in better crops for the country's 234 million farmers.

According to India Meteorological Department's National Climate Centre in Pune, rainfall since June 1 has been 7% above the average recorded between 1941 and 1990.

Steel pointed out that a good monsoon season therefore could help support gold demand later in the year.

He said recent rally in prices has impacted physical buying, especially in India, adding buying from emerging markets should reemerge soon as demand remains strong and prices attractive to buyers.

Steel also said that limited physical demand for spot gold in Indian markets is viewed more as a reaction to the recent jump in price than to a newfound disinclination to buy gold.

"Gold prices still appear to be at attractive enough levels to merit accelerated purchases from the emerging world, and we suspect buying will soon materialize," he added.

Good rains are expected immensely boost the prospects for a bigger harvest of rice, lentils and soybean in India.

Below average monsoon had wrecked havoc with India's large agriculture areas two years, resulting in a poll debacle in several states for the ruling Congress government headed by Prime Minister Manmohan Singh.

The forecast of normal monsoon has cheered the farming community as they are eagerly waiting for the crop season.

Sowing of most early winter-harvested crops, including rice, corn, lentils, soybeans, cotton and sugar cane, begins with the onset of the monsoon.