India gold demand abates on record high prices

MUMBAI (Reuters) - India's gold demand abated as prices struck a fresh record high on Wednesday afternoon, after offtake picked up slightly in the previous two sessions, while scrap flow eased on hopes of higher prices, dealers said.

The most traded December gold contract struck a new record high of 17,163 rupees, before trading 0.66 percent higher at 17,134 rupees per 10 grams at 2:36 p.m.

"On Monday and Tuesday, we did a few deals, though volumes were thin, but today it is quiet," said a dealer with a state-run bullion dealing bank in Mumbai.

The yellow metal has been on a record-breaking spree, with most record highs recorded this month, on the back of a weaker dollar overseas, enhancing the yellow metal's appeal as an alternative investment.

"My sheet contains some orders at $1,090-1,100 (an ounce)," said another dealer with a private bullion dealing bank.

However, the flow of scrap eased as consumers sought higher prices, traders said.

"They are simply not ready to sell, they feel that these prices are too low. They now want 17,500 rupees," said Jitendra Kantilal, partner, Jugraj Kantilal & Co., a Zaveri Bazaar-based scrap dealer.

Kantilal, who estimated 100-150 kgs of scrap gold had entered Zaveri Bazaar last week, offered to buy at 17,200 rupees per 10 grams.

Silver futures also hit a contract high of 28,484 rupees per kg, tracking gold.