Gold demand in India surged by 15 per cent during the Q1 2017 to 123.5 tonne, indicating a return of optimism in the industry, according to World Gold Council (WGC).
The total gold demand in the country stood at 107.3 tonne in the January-March of 2016, impacted by jewellers' strike over excise duty introduction.
In value, the gold demand grew by 18 per cent in Q1 2017 to Rs 32,420 crore, against Rs 27,540 crore in Q1 2016, according to the WGC's 'Q1 Gold Demand Trends' report.
"Demand in Q1 2017 was up 15 per cent, though this is against the low base of Q1 2016, that was impacted by jewellers' strike on excise duty introduction. It signals both a return of optimism and the resilience of this industry that has been living with some tough challenges since 2013," WGC Managing Director, India, Somasundaram PR told PTI here.
He said the rupee appreciation protected Indian households from the hike in dollar prices, giving them an additional reason to meet the gold demand that was created in 2016, following demonetisation and other regulatory measures against unaccounted wealth.
Total jewellery demand was up by 16 per cent at 92.3 tonne in the fist quarter of 2017, compared to 79.8 tonne in the same period last year.
The value of jewellery demand was Rs 24,220 crore, a rise of 18 per cent from Rs 20,484 crore Q1 2016.
Total investment demand for the period was up by 14 per cent at 31.2 tonne against 27.5 tonne in the same period of 2016. In value terms, gold investment demand rose by 16 per cent at Rs 8,200 crore, from Rs 7,050 crore in Q1 2016.
Recycling went up by 3 per cent in Q1 2017 to 14.5 tonnes compared to 14 tonne in Q1 2016. The total imports during January-March period rose by 112 per cent to 270.1 tonne from 127.4 tonne in Q1 2016.
"Wedding demand, that accounts for 40-50 per cent of jewellery, bars and coins demand, was strong in the first quarter. Opportunistic purchasing by investors and an increase in restocking means the gold market is likely to maintain a healthy uptake for the first half of 2017.
The forecast for normal monsoons could also play a role in stabilising consumer demand in the second half of the year," Somasundaram added.
The combination of the wedding season, Akshaya Tritiya festival and continued remonetisation of India's economy should support gold jewellery demand, he said.
WGC maintains its full year demand forecast at 650-750 tonne considering the short-term challenges arising from the PAN card registration, restrictions on cash transactions and the introduction of Goods and Services Tax (GST), he said.
"There are concerns about transitioning to GST that will be introduced from July 2017. Though the introduction of GST is widely welcomed by organised players, there are concerns about the level of tax. GST, coupled with import duty, needs to be below the current level of 12 per cent," he added.