Gold prices in India hit record high, buyers refrain

MUMBAI (Reuters) - India's benchmark gold futures rose 1.26 percent on Thursday to hit a new peak, driving away physical traders seeking to stock the yellow metal in the middle of the festive season.

The key gold for October delivery on the Multi Commodity Exchange (MCX) hit its peak at 30,699 rupees per 10 grams, before trading 1.09 percent higher at 30,646 rupees, backed by overseas leads, though a stronger rupee kept the upside limited.

Global gold rose to their highest levels in more than three months on Thursday, shaking off months of lethargy after minutes from the latest U.S. Federal Reserve meeting fuelled hopes for the swift launch of more bond buying.

The rupee, which rose to an over one-week high on Thursday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

"Buying is nil and there will be more of scrap," said Ketan Shroff, director with Pushpak Bullion in Mumbai.

Festival season is underway in India, the world's biggest consumer, and will continue till November. Weddings also take place during this period. Gold sales are expected to fall 40 percent during this period to 200 tonnes.

Gold imports have already halved so far this year and a likely drought could further dent rural demand. Rural areas, which depend on monsoon rains for yields and income, contribute to about 60 percent of the country's demand.

In the spot market, HDFC Bank quoted 30,825 rupees per 10 grams, up about 300 rupees from previous close.

Silver also surged more than 2.5 percent to hit its highest level in four months, following the yellow metal.

The most-traded silver contract for September delivery was 2.53 percent higher at 56,710 rupees per kg, after hitting a high of 56,856 rupees, a level last seen on April 19.

(Reporting by Siddesh Mayenkar & Rajendra Jadhav; Editing by Anand Basu)