As gold reaches another record high in India doubts begin to creep in

Gold reached another peak in Saturday trading in India, the world’s largest consumer of the precious metal, and is now within reach of the psychologically important level of 30,000 rupees. Bullion hit an all time record on Friday in New York and is already up more than 30% in 2011, after a decade of annual gains.

India’s imports could hit a record high of 1,000 tons this year the president of the Bombay Bullion Association told reporters at a major gold conference in Kovalam in south India, but others struck a more cautious note with Scotia Mocatta, a leading Asian precious metal trader, saying imports could fall 20% as higher prices scare of retail buyers.

Consumption in India last year drove Indian bullion imports to the highest ever at 958 tons, according to the World Gold Council.

Bloomberg quoted Prithviraj Kothari, president of the Bombay Bullion Association: “The equity market is volatile and property prices are too high, driving people toward gold as an investment. The rains have been good so far, so we can expect good demand for festival season this year.”

Reuters spoke to Sunil Kashyap, head of Asia, Scotia Mocatta: “They are buying, we talk to jewellers, and they are saying demand is very high. People are planning their wedding purchases in advance because they feel that prices may go to 30,000 (rupees).” He added however that “if there is a correction, people may just step aside” and that Indian imports could fall 20% this year.

The Wall Street Journal quotes Praveen Gupta, head of bullion at Shree Ganesh Jewellery House who said there could be a correction once the price reaches $2,000/oz.

Reuters also spoke to Jeffrey Rhodes, global head of precious metals at the brokerage INTL FCStone: “My problem is that people are buying gold and they don’t understand why they are buying gold and that’s a big problem and that is a classic symptom of a bubble.”