UPDATE 1-India trade body says no gold imports so far in Feb

* India gold imports to drop for second month in a row

* High prices squeeze demand, triggering recycling

(Adds details, bank dealer, analyst quotes in paragraphs 10-14)

By Ruchira Singh

MUMBAI, Feb 13 (Reuters) - Gold purchases by India, the world's largest importer of the metal, are on course to fall for the second month in a row with no imports so far in February because of high prices, the head of a trade body said on Friday.

"Forget imports, whatever sale has happened, has happened from old stocks imported earlier," said Suresh Hundia, president of the Bombay Bullion Association.

Gold imports in January plummeted 89 percent to 1.9 tonnes from 18 tonnes in the same month last year, he said.

Domestic prices in India have been hitting record highs over the past few weeks, as a weaker rupee added to the rise in world gold prices denominated in dollars.

On Thursday, gold touched an all-time high of 14,824 rupees ($304) per 10 grams on the Multi Commodity Exchange of India Ltd (MCX) MAUc1. Prices softened on Friday to 14,570 rupees per 10 grams by around 1030 GMT, as foreign markets slipped after topping $950 an ounce the previous day.

Hundia said high domestic prices had triggered heavy sales of old jewellery by people, increasing the availability of recycled gold while demand has been shrinking.

"There is a lot of old gold coming ... that is meeting the local demand," Hundia said, referring to scrap sales that usually pick up every time gold prices jump.

Gold sales so far this month have been about 200 to 300 kg, far below the same period last year, Hundia said.

Though dollar-priced gold hit an all-time high in March 2008 at $1,030.80 an ounce, the record run in India was caused by the rupee's 19.1 percent slide against the dollar in 2008.

A bank dealer said demand had diminished after prices went above $900 at the end of January.

"Physical buying is almost stagnant ... locally available gold is cheaper," said the dealer.

However, demand could perk up when prices fall, independent analyst Bhargav Vaidya said.

"I think in the full year, the rise or fall in imports could be not more than 10-15 percent," he said.

The bank dealer said the next big buying could come ahead of the Akshaya Tritiya, an auspicious hindu festival, that falls on April 27. ($1=48.7 rupees) (Editing by Ranjit Gangadharan and Peter Blackburn)