Mumbai: Gold demand declined by a steep 12 percent in the first quarter of 2018 to 115.6 tonne due to high prices and poor investment demand, the World Gold Council (WGC) said on Thursday.


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In the March 2017 quarter, demand had stood at 131.2 tonne, WGC said in a report.


As demand fell by 12 percent, imports plunged by a whopping 50 percent in the first quarter to 153 tonne from 260 tonne a year ago, according to the report.


Demand fall was led poor jewellery demand which during the reporting quarter dipped 12 percent to 87.7 tonne from 99.2 tonne a year ago.


In terms of value, demand fell 8 percent to Rs 31,800 crore from Rs 34,440 crore.


"Decline in demand can be attributed to a number of factors, including the rising local gold prices, a substantial drop in the number of auspicious wedding days this year compared to the previous year, and an anticipation of an import duty cut in the Budget," WGC India managing director PR Somasundaram told PTI.


"The transition to GST, especially by the unorganised sector, also affected demand to some extent," he added.


He also said the PNB scam impacted the trade sentiment, which somehow got revived by the time of Akshaya Tritiya.


In value terms, jewellery demand dropped 7 percent to Rs 24,130 crore from Rs 26,050 crore a year ago.


Investment demand plunged 13 percent to 27.9 tonne from 32 tonne in the previous 12 months period.


In value terms, gold investment demand stood at Rs 7,660 crore, down 9 percent from Rs 8,390 crore.


Total gold recycled also declined 3 percent to 14.1 tonne from 14.5 tonne, the report said.


"The first quarter is not naturally a dynamic period for gold in the country as people usually settle their other financial commitments for tax purposes. Moreover, there was also no catalyst like duty cuts to trigger demand," Somasundaram said.


The 50 percent decline in imports to 153 tonne from 260 tonne was "mainly on account of subdued consumer demand, down-stocking following the GST transitional period and also on expectations of duty cut in the Budget," he added.


Asked about import this year, Somasundaram said inward shipment is likely to be on similar lines with demand.


For the full year of 2018, he said, gold demand is expected to be in the range of 700-800 tonne.


"We are positive about demand going forward due to expectation of better monsoons and the resultant higher rural income and an overall better GDP growth. The compliance standard is growing and in the long-run it's going to be positive and transform the industry," he said.