Mumbai, May 3 (IANS): Demand for gold in India for January-March quarter (first quarter) of 2018 was down by 12 per cent at 115.6 tonne compared to overall Q1 demand for 2017 due to rising gold prices, exaggerated by a weakening rupee, a World Gold Council statement said here on Thursday.

Total Jewellery demand in India for Q1 2018 was down by 12 per cent at 87.7 tonne as compared to Q1 2017 (99.2 tonne).

"Local gold price rises led to the second weakest quarter for jewellery demand in almost 10 years. After the strongest Q4 on record in 2017, Indian jewellery demand saw a sharp downturn in Q1 2018, falling 12 per cent year-on-year to 87.7 tonnes," said Somasundaram PR, Managing Director, India, World Gold Council.

"A substantial drop in the number of auspicious wedding days during the period compared with Q1 2017, could be a factor for muted demand as consumers made less wedding-related purchases. Imports were also down 50 per cent year-on-year, in anticipation of an import duty cut in the Union Budget that did not materialise," he added.

India's Q1 2018 gold demand value was Rs 31,800 crore, a fall of 8 per cent in comparison with Q1 2017 (Rs 34,440 crore).

Total Investment demand for Q1 2018 was down by 13 per cent at 27.9 tonne in comparison with Q1 2017 (32 tonne). Total gold recycled in India in Q1 2018 was 14.1 tonne, a drop of 3 per cent compared to 14.5 tonne in Q1 2017.

However, Somasundaram said: "The positive sentiment following the announcement in the Union Budget about an impending gold policy to make gold an asset class will boost the industry momentum to get more organised and transparent and build a strong case for a central gold body under the gold policy."

He said trade activity resumed positively during Akshaya Tritiya demonstrating the resilience of the industry.

"Policy focus on doubling farm income and ease of business under GST augur well for the gold industry in 2018 and the medium term. New ways of buying gold through digital platforms are catching up quickly; this will not just promote ease of savings but bring about a mindset change, thereby enhancing acceptability of centrally vaulted gold - which underpins any attempt to mainstream gold including Gold Monetisation Scheme," he added.

According to World Gold Council, for year 2018, full year gold demand expectations for India is in the range of 700 - 800 tonne.

Globally, gold demand had a soft start to 2018, reaching 973 tonne, the lowest first quarter since 2008. This was largely caused by a fall in investment demand for gold bars and gold-backed exchange-traded funds, as a subdued gold price environment hampered demand, the statement said.

"Global jewellery demand was roughly flat at 488 tonne, down 1 per cent on Q1 2017. Demand in China was buoyed by holiday demand, and US demand continued to improve in response to the supportive economic backdrop. In contrast, Indian consumers were discouraged by rising gold prices, exaggerated by a weakening rupee, with demand down 12 per cent compared with 2017," it added.