Total investment in gold bars and coins edged up by 9% to 290 metric tons for the quarter, compared with a year earlier.
"People are waiting for prices to fall to $1,200", a Singapore-based physical dealer said.In Japan, however, demand this week remained limited due to national holidays with gold being sold at a discount of 25 cents.
A focus on capital outflows may have been weighing on the Chinese central bank's interest in gold, the WGC's head of market intelligence Alistair Hewitt said.
"Gains in India were the main reason for the slight y-o-y increase, but global jewellery demand remains relatively weak in a historical context", the WGC said in its report.
In 2016, gold demand fell 22 percent from a year earlier to 666.1 tonnes, the lowest in seven years.
Inflows into exchange-traded funds touched 109 tonnes, which, although good, was nonetheless just a fraction of last year's near-record inflows. Slower central bank demand also contributed to the weakness, with 76 tonnes added to reserves, compared with 104 tonnes added in the first quarter of 2016. Total gold imports into China were 136 mt in March, up 34% from 101 mt a year earlier, and almost double the 70 mt in February, said the researcher.
"Demand is down year-on-year, but that is largely because Q1 last year was exceptionally high". As a result, we create structural shifts in demand for gold across key market sectors.
Stable gold prices, which were up two per cent in the March quarter to ₹26,249 ( ₹25,677) per 10 grams, helped revive demand.
The government's push for transparency in India's economy began to take effect in the gold market, with a gradual shift towards electronic transactions, it said.
The total global supply of gold in the three months to March 30 was a 12 per cent-lower 1 032 tonnes, mainly on a 21 per cent recycling fall to 283 tonnes.
The report further said that mine output of 764 tonne was slightly changed from the first quarter of 2016 (of 768 tonne), and it is in line with the prediction that the production will remain largely steady before declining. "The 9% rise in the US$ price between end-December and end-March restrained demand, although USA dollar weakness meant that consumers in many markets were protected to some degree".
"Fintech companies are also tapping into gold-backed products that reach young investors, which effectively popularizes gold－an investment conventionally believed to be a favored investment tool for senior-age investors", said a research note from Sinolink Securities Co. "Comfortable pricing of gold has also been a major positive factor for incremental business during these sale seasons", said Abdullah.
The outlook for India's gold demand is robust, but GST remains a cause of concern.