Gold prices in India soared to record highs on Thursday, prompting many people in the world's largest bullion consumer to sell old stock, traders said.

The sharp rise in scrap supply and zooming global prices have severely crimped Indian gold imports during the current high-demand marriage season, which started last week, they said.

"People are lining up outside shops to sell gold jewellery and coins," said Suresh Hundia, president of the Bombay Bullion Association. "Jewellers are issuing tokens to manage the crowd."

Jewellers are buying old ornaments at a discount to current prices and recycling them, instead of using new gold bars, traders said.

Safe-haven gold opened at a record-high price of Rs 68,500 a bar in the Bombay market on Thursday, up from  Wednesday's close of Rs 67,900 and a month-earlier Rs 63,500.

Domestic prices are directly linked to world prices, which hit a six-year high on Thursday, since imports account for more than two-thirds of Indian gold consumption.

In Hong Kong, spot gold hit $364.00/$365.00 an ounce on Thursday on increasing fears of a US-led war in Iraq.

Traders said daily gold imports into Jaipur, a leading bullion trading centre, were expected to slip to just 100 bars (of 116.64 grams each) this week -- from about 500 bars in the past week. Jaipur usually imports an average of 3,000 bars a day.

Importers were waiting for prices to stabilise -- even at higher levels -- for at least two to three days before resuming purchases to cover urgent requirements, they said.

"'Wait and watch' is the best policy at the moment as no one is able to guess price movements," said Narendra Kumar Rathore, a Jaipur-based gold importer.

Jewellery  sales down

Sales of gold jewellery, which accounts for 85 per cent of Indian gold demand, have fallen sharply due to volatile prices, traders said.

"Compulsory buying, such as for weddings, will continue to take place despite volatile prices," said Nayan Pansare, an official of gold trading firm Inter Gold Ltd.

Gold jewellery is an essential part of Hindu marriages, when parents gift it to their daughters for financial security. The wedding season begins in mid-January and ends in March.

Domestic gold sales for July-September -- the latest figures available -- fell 8.5 per cent year-on-year to 116.4 tonnes. Imports fell 12.3 per cent to 87 tonnes, according to the World Trade Council.