Mumbai: Gold demand in India, the world’s biggest consumer of the precious metal, may drop 50% during this year’s Akshaya Tritiya festival because of rising prices, trading firm RiddiSiddhi Bullions Ltd said.

Demand may decline to 20 tonnes during the festival, compared with last year’s 40 tonnes, Prithviraj Kothari, director of the Mumbai-based company, said on Wednesday.

Akshaya Tritiya, on 16 May, is considered by India’s 890 million Hindus as the traditional day to buy precious metals. Gold rose to a record on Wednesday and is heading for a 10th consecutive annual gain as investors seek a haven amid European debt concerns.

Investment option: A file photo of a jewellery store in Kolkata. Gold prices rose to a record on Wednesday. Indranil Bhoumik/Mint

Bullion for immediate delivery reached a record $1,245 (Rs56,398) an ounce and closed atRs18,255 per 10g in Mumbai. Prices have gained 12% this year.

Futures for June delivery advanced as much as 1.3% to a record $1,235.50 on the Comex in New York, taking this year’s gains to 13%.

In India, gold futures for June delivery rose 1.4% to Rs18,142 per 10g on the Multi Commodity Exchange at 12.18pm in Mumbai. The price climbed to an all- time high of Rs18,364 on 3 December.

Jewellery purchases in India in April and May may be less than a year earlier after prices climbed, Kishore Narne, head of research at Anand Rathi Commodities Ltd, said.

“It was a too fast, too swift move on the upside," he said. “Normally, in that case, people just wait or they postpone their jewellery purchases and expect for some dips to buy."

Still, investment demand for gold coins and bars is still strong, Narne said. The precious metal may reach $1,300 by the end of the month, he added.

Bullion in New York may reach $1,261 an ounce this month before correcting to $1,185, Kothari said. There will be huge demand in India should local prices drop to Rs17,000 per 10g, he said.