Gold demand was up 15 per cent in the quarter ended March, at 123 tonnes, against 107 tonnes logged in the same period last year, largely due to stable prices and a lower base. Jewellery demand increased 16 per cent to 92 tonnes (80 tonnes) as the demand last year was impacted by a prolonged strike against levy of excise duty.

In value terms, sales were up 18 per cent at ₹32,420 crore ( ₹27,535 crore), while in dollar terms, theyincreased 19 per cent to $4.8 billion ($4 billion).

Somasundaram PR, Managing Director, India, World Gold Council, said the revival in demand signals the return of optimism and resilience of this industry, which has been living with tough challenges since 2013.

“The rupee appreciation significantly protected Indian households from the hike in dollar gold prices, giving them an additional reason to meet the latent demand that was created in 2016 following demonetisation and other regulatory measures against unaccounted wealth,” he said.Wedding season demand, which accounts for 40-50 per cent of jewellery, and bars and coins, were strong in Q1.

Opportunistic purchasing by investors and an increase in restocking means the gold market is likely to maintain a healthy uptake in the first half of this year, Somasundaram said.The forecast of a normal monsoon could also play a promising role in stabilising consumer demand while the concern over the level of tax on gold in the Goods and Services Tax regime remains, he added.

Stable gold prices, which were up two per cent in the March quarter to ₹26,249 ( ₹25,677) per 10 grams, helped revive demand.

Buoyed by rising demand, gold imports more than doubled to 270 tonnes (127 tonnes).

Total gold recycled in India was at 14.5 tonnes (14 tonnes) in the March quarter.Global gold demand in the first quarter of 2017 slipped 18 per cent from the year before due to a slowdown in inflows in exchange-traded funds and a drop in demand from central banks.