Gold prices in India hit a record high on Wednesday, tracking a global rally, as expectations of more stimulus to resuscitate pandemic-hit economies lifted the metal's appeal as an inflation-hedge.

Local gold futures reached an all-time high of 49,996 rupees ($670.32) per 10 grams in early trade, taking their gains to 28% in 2020 after rising a quarter in 2019.

However, the price rise dampened retail demand for gold in India, the world's second-largest consumer of the precious metal.

In overseas market, spot gold jumped more than 1% on Wednesday to its highest in nearly nine years, driven by a weaker dollar and safe-haven buying.

The price rise has been dampening retail demand, although lately investment demand is improving, said a Mumbai-based bank dealer with a bullion importing bank.

"But share of investment demand is very small compared to retail purchases."

India's gold imports in the June quarter plunged 96% from a year earlier to 13 tonnes after shipments virtually ground to a halt in April and May.

Local silver prices jumped nearly 6% on Wednesday to 60,782 rupees per kg, the highest in 7-1/2 years.