MUMBAI, April 28 Reuters India39;s gold demand is likely to remain soft in second quarter after falling 18 in the first quarter as retail purchases during a key festival early next month could be below normal because of volatile prices, the World Gold Council WGC said on Thursday.

Lower purchases by the world39;s second biggest gold consumer could weigh on prices , which are trading near their lowest level in two months.

But falling demand for gold imports could help narrow India39;s trade deficit and support the ailing rupee .

Demand could be subpar during Akshaya Tritiya, Somasundaram PR, regional chief executive officer of WGC39;s Indian operations told Reuters.

Indians will celebrate annual Hindu and Jain holy festival of Akshaya Tritiya early next week, when buying gold is considered auspicious.

India39;s demand for gold fell 18 from a year ago to 135.5 tonnes in the first quarter as jewellery consumption fell 26 from a year ago due to higher prices and fewer weddings, the WGC said in a report.

Consumers are linking higher prices to the Ukraine war and expecting them to come down once war is over. That is making them postpone the purchases. This is going to continue in this quarter, Somasundaram said.

Local gold prices started the year at 48,050 rupees per 10 grams, but jumped to 55,558 rupees per 10 grams in March after Russia invaded Ukraine.

Higher prices lifted availability of old jewellery and coins, also known as scrap supplies, by 88 from a year…