Demand for gold in India rose by 27 per cent to 256.5 tonnes during the January-March 2013 quarter, while its imports declined by 5.7 per cent to 215 tonnes, World Gold Council (WGC) said on Thursday.

The demand for the precious metal stood at 202.1 tonnes in the year-ago period and imports at 228 tonnes.

Of the total demand, the WGC said jewellery demand rose by 15 per cent to 159.5 tonnes from 138.3 tonnes, while investment demand increased by 52 per cent to 97 tonnes from 63.8 tonnes in the review period.

“Gold demand in India for both jewellery and investment continues to remain strong.

The recent fluctuations in gold price have only served to reinforce Indian consumers’ appetite for purchasing physical gold,” WGC India Managing Director Somasundaram PR told reporters here at the release of the report.

Imports remained lower as stockists had purchased heavily in the previous quarter in anticipation of rise in import duty, he added.

Good rabi crop and lower gold prices during February led to higher jewellery demand, the WGC said, adding that “the negative impact of rise in gold import duty in late January was for the most part eliminated by these positive factors”.

Outlook

On the outlook for the April-June quarter, WGC India chief said demand for gold would remain robust due to lower prices and higher buying in the ongoing wedding and festive season.

Demand will also be fuelled by an expected rise in rural income on good monsoon projected this year.

Asked if import curbs will reduce demand, Mr. Somasundaram said, “There is nothing to interrupt buying. Trying to restrict gold demand may not be effective. We believe putting further controls on supply side is not going to reduce demand, instead it might encourage unauthorised channels”.

Global demand

At the global level, WGC said gold demand fell by 13 per cent to 963 tonnes in the first quarter of 2013 as strong demand for gold jewellery, bars and coins was exceeded by substantial net outflows from gold exchange traded funds (ETFs).

In terms of value, WGC said India’s gold demand rose by 32 per cent to Rs.72,899.4 crore in January-March this year from Rs.55,148.7 crore in the year-ago period.