A surge in global gold prices to record highs could dampen consumption during the wedding season in India, but top buyer China will see robust safe-haven demand this year, analysts and traders said.

China and India together account for more than half of total global gold demand.

Benchmark spot prices hit a record high of $2,170.99 an ounce on Friday, driven mostly by bets on U.S. monetary easing, which increases investors' appetite for zero-yield paper gold as opposed to competing assets such as Treasury bonds and the dollar.

In India, the world's second-largest gold consumer and a major importer, domestic prices rose to a record 65,587 rupees per 10 grams.

The rise in prices led to a drop in demand, which prompted dealers to offer discounts of about $30 an ounce over official domestic prices - inclusive of 15% import and 3% sales levies, the highest since April 2023 - versus last week's $1 premiums.

"Consumers can't wrap their heads around current price levels. If prices stay this high, it's going to affect demand during the ongoing wedding season," said Prithviraj Kothari, president of the India Bullion and Jewellers Association.

"There's no reason for banks and refiners to import. March imports would be negligible," Kothari said.

Gold is an intrinsic part of Indian weddings and the summer wedding season is currently under way.

"Even after hefty discounts, jewellers are not ready to make purchases for wedding season. They believe prices will not sustain at these levels and will eventually correct," said a Mumbai-based bullion dealer with a private bank.

"Scrap supplies are increasing. Consumers who need to buy are exchanging old jewellery for new," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

In China, dealers cut premiums to $20-$36 over benchmark prices versus $36-$48 last week, but traders said overall demand should be robust in 2024.

"While the price spike has driven some selling, demand will be up after some time as people get used to these levels," especially on safe-haven demand, said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

Asian buyers are known to be price-sensitive, but that might change, said Ross Norman, an independent analyst based in London.

"The mindset changes, and as the market goes higher, it almost validates the reason you're buying," Norman said.

Analysts said the surge in gold prices could also attract some new investor interest in other regions.

A sustained rally could revive buying activity in Germany, a key retail hub for coins and bars, said Alexander Zumpfe, senior precious metals trader at Heraeus.

(Reporting by Rajendra Jadhav in Mumbai, Ashitha Shivaprasad and Harshit Verma in Bengaluru, and Polina Devitt in London; additional reporting by Brijesh Patel; Writing by Arpan Varghese; Editing by Mayank Bhardwaj and Jane Merriman)