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India gold prices hit record high on global cues, weak rupee

By Rajendra Jadhav
A salesman arranges gold bangles inside a jewellery showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in Mumbai

By Rajendra Jadhav

MUMBAI (Reuters) - Gold prices in India jumped over 2% on Monday to record levels, following gains in overseas markets and as the rupee fell to a five-month low, dampening demand further in the world's second-biggest consumer of the precious metal.

Local gold futures hit an all-time high of 36,990 rupees ($524.70) per 10 gram, taking their gains to more than 17% in 2019.

"Demand is negligible due to higher prices. Even after offering hefty discount, consumers are not ready to buy," said Mukesh Kothari, director at dealer RiddiSiddhi Bullions in Mumbai.

Dealers were offering a discount of up to $36 an ounce over official domestic prices, the highest since August 2016. The domestic price includes a 12.5% import tax and 3% sales tax.

India's gold consumption dipped 1.5% in 2018 to 760.4 tonnes, below a 10-year average of 838 tonnes, according to data compiled by the World Gold Council.

The council last week forecast consumption to soften in the September quarter as record high local prices curtails buying.

Local gold prices are rising more rapidly due to a falling rupee, said a Mumbai-based dealer with a bullion importing bank, adding that, "demand will remain weak even in August. Jewellers are not interested in buying at current price levels."

The rupee plunged to a five-month low on Monday as the escalating China-U.S. trade spat sent most regional currencies lower while tensions in the disputed region of Kashmir also weighed on investor sentiment.

Local silver futures were 2.25% higher at 42,295 rupees per kg, after rising to 42,493 rupees earlier in the day, the highest since April 17, 2017.

($1 = 70.4980 Indian rupees)

(Reporting by Rajendra Jadhav; Editing by Subhranshu Sahu)