Mumbai, April 30 (IANS): India's gold demand rose to 136.6 tons in the January-March quarter which represents an 8 per cent increase over the same quarter of the previous year, according to figures released by the World Gold Council (WGC) on Tuesday.

Gold purchases have increased despite rising prices, reflecting higher incomes in a growing economy, according to market analysts.

Out of the total gold demand, the jewellery demand in India increased by 4 per cent to 95.5 tonne from 91.9 tonne. The total investment demand (in the form of bar, coin among others) grew 19 per cent to 41.1 tonne from 34.4 tonne.

India's gold demand in value terms rose 20 per cent to Rs 75,470 crore during the quarter compared to the same period last year.

The increase in the demand was higher from investors who saw gold as a safe-haven asset amid rising geopolitical tensions in the Middle East and the Russia-Ukraine war.

The Reserve Bank of India also stepped up buying of the precious metal which saw its gold reserves increasing by 19 tons in the January-March quarter this year, surpassing last year's net purchases of 16 tons, the WGC said.

Demand for gold from India is likely to range between 700 and 800 metric tons in 2024, with the figure falling near the lower band if prices continue to increase, said Sachin Jain, CEO of WGC's Indian operations.

Domestic prices of gold soared to a lifetime high of Rs 73,958 per 10 grams in April after steadily rising by more than 13 per cent in 2024. The increase comes on top of a 10 per cent rise in 2023.

Rising gold prices are leading to higher returns for investors, but the consumption demand for use in jewellery is being dampened due to the higher cost, Jain said.

Increased purchases of gold during the Gudi Padwa festival further fuelled gold prices this month. The sharp increase in prices could lead to some moderation in gold purchases during the Akshaya Tritiya festival compared to last year, according to jewellers.