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India gold prices hit record high on safe-haven rush, weak rupee

By Rajendra Jadhav
A salesman shows a gold necklace to customers at a jewellery showroom in Ahmedabad

By Rajendra Jadhav

MUMBAI (Reuters) - Gold prices in India jumped over 2% on Monday to record levels amid a rush to invest in safe-haven assets globally as well as a steep fall in the rupee, dampening demand for the precious metal in the world's second-biggest consumer.

Local gold futures hit an all-time high of 41,096 rupees ($570.05) per 10 grams, taking their gains to more than 5% in 2020 after rallying nearly 25% in 2019.

The sharp gold price rise has been deterring jewellers and retail buyers from making purchases, said Mukesh Kothari, director at dealer RiddiSiddhi Bullions in Mumbai.

In overseas market, gold surged close to a seven-year peak on Monday, as investors flocked to the safe-haven metal on escalating U.S.-Iran tensions.

The depreciation in rupee is making gold even more expensive for Indian buyers and squeezing demand, said a Mumbai-based dealer with a bullion importing bank.

The rupee plunged to a seven-week low against the dollar on Monday as oil prices surged more than 2%.

Dealers were offering a discount of up to $7 an ounce over official domestic prices on Monday afternoon. The domestic price includes a 12.5% import tax and 3% sales tax.

India's gold imports in 2019 fell 12% from a year ago to the lowest level in three years as retail buying faltered in the second half after local prices rallied to a record high, a government source said on Friday.

Local silver futures were 2.13% higher at 48,541 rupees per kg, after rising to 48,660 rupees earlier in the day, their highest level since Sept. 6.

($1 = 72.0925 rupees)

(Reporting by Rajendra Jadhav; Editing by Rashmi Aich)