Global gold demand fell in the third quarter as investors bought fewer bars and coins and buyers in China held back because of an economic slowdown, an industry group says.
About 1,085 metric tons of gold was sold worldwide in the three months through September, the World Gold Council said in a report. That's down 139 metric tons, or 11 per cent, from a record 1,223.5 tonnes in the same period of 2011.
Bar and coin purchases slid by nearly a third to 294 tonnes while jewelry buying dipped nine per cent to 449 tonnes. Central-bank purchases also slowed. The declines were offset somewhat by rising demand from exchange traded funds that buy gold bars on behalf of investors.
Investors in Europe accounted for more than half the drop in bar and coin demand as investors were "less aggressive" in their buying. But the London-based council said in a report that investors were still continuing to buy at historically high levels. The results also looked poor because they were being compared with "extraordinary levels of demand" in the previous year, when investors flocked to the safety of gold because of the worsening European debt crisis, weak U.S. dollar and rising inflation.
Gold, which has risen about 10 per cent in the past six months, was trading at $1,725 an ounce.
Gold demand in China, the world's second-biggest market, "lost further momentum" in the quarter, with demand falling eight per cent to 176.8 tonnes as the country's painful economic slowdown hurt consumer sentiment.
"This was particularly noticeable among the middle classes whose purchases of 18-carat gold jewelry were among the worst casualties," the report said. A slowdown in the number of jewelry stores opening in China, which also sell bars and coins, also hit demand.
But the report forecast that China would recover as the holiday gift-giving season approaches and on hopes of an economic stimulus package from the country's new leaders.
India, the world's biggest gold market, rebounded eight per cent to 223.1 tonnes as buying picked up again following strikes by jewelers, fewer auspicious marriage days and a new import duty in the first half of the year. Rising prices also prompted people to buy on expectations of further price increases, the report said.
