India's love affair with gold is waning as savvy housewives in the world's largest importer of the precious metal opt to capitalise on rocketing prices by selling off their spare jewellery.

With prices of the commodity, traditionally viewed as a safe haven in uncertain times, hovering close to record highs, Suresh Hundia, head of the Bombay Bullion Association, said that Indian consumers are deferring all but the most essential gold purchases. "People, households, are selling spare gold. There is zero demand at these prices in India," he said.

Amid volatile trading, gold gained 3 per cent last week, again closing well above $900 (£454.60) an ounce. In India, meanwhile, prices have surged past 10,000 rupees per 10 grams, a level considered especially significant by retail buyers. Today, gold for February was being quoted at 11,615 rupees per 10 grams of the Multi Commodity Exchange of India.

Monesh Belel, of Tribhovandas Bhimji Zaveri, one of India's largest retail jewellery groups, said: "Seven out of ten Indians will sell at levels above 10,000 rupees per 10 grams."

He added, however, that the market was being supported by the Indian wedding season, where golden gifts are considered especially auspicious. "An occasion such as a wedding leaves one with no option but to buy. But casual buyers will wait before picking up a bangle."

About three quarters of the 800 to 900 tonnes of gold estimated to have been imported into India last year – a figure boosted by the rupee's strength – is though to have been used for jewellery.

Mr Hundia said that domestic sellers of scrap gold in India were cashing in at prices about 3 per cent below those quoted in the trading pits of London and New York, which remained firm today on the back of power outages in South African mines.

Indian imports, the largest in the world and a pillar of the international gold trade, have plummeted as much as 80 per cent this month, he added.

Analysts – along with Bombay's jewellers – widely predict that the market will remain firm, with some anticipating a spike beyond $1,000 an ounce in coming sessions.

James Turk, of the Freemarket Gold & Money Report, said: "Moves into new all-time high ground tend to be explosive, which describes gold's current position."

"In other words, anything can happen from here, including a rocket shot to $1,000 over the next few weeks, which I consider to be a very good probability. We already have lift-off."

He predicts gold's reputation as a safe haven asset will bolster prices. "When people become fearful about national currency because of inflation, bank problems, counterparty risk, etc … they increasingly turn to gold."

In particular, the US Federal Reserve's next decision on interest rates, due on Wednesday, will be scrutinised. Any move likely to weigh on the value of the dollar – such as a further US rate cut – is likely to boost the prices of gold, which is priced in dollars on the global markets.

Economists believe that the chances of an Indian rate cut have been increased by the recent turbulence on the country's stock market. The country's central bank meets tomorrow.

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