World Gold Council said investors in Europe accounted for more than half the drop in bar and coin demand but added that investors were still continuing to buy at historically high levels.
LONDON(BullionStreet): Less aggressive buying by European investors remained the major cause for the dip in gold bar and coin demand during the third quarter this year, WGC said.
Latest report by the London based World Gold Council said investors in Europe accounted for more than half the drop in bar and coin demand but added 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,WGC said.
Gold demand in China, the world's second biggest market, "lost further momentum" in the quarter, with demand falling 8 percent to 176.8 tons 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.
Companies in China would buy gold jewelry and other luxury items to give as bonuses to staff and as a way to thank customers, said Albert Cheng, a managing director at the World Gold Council.
India, the world's biggest gold market, rebounded 8 percent to 223.1 tons 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 prices increases, the report said.