LONDON(BullionStreet): Global demand for gold dropped in the third quarter this year but demand in world's largest consumer India recoverd to register a 9% increase during the period.

According to World Gold Council's latest report, Global gold demand in Q3 2012 was 1,084.6 tonnes,down 11% from the record Q3 2011 figure of 1,223.5 tons.

WGC said demand fell in the third quarter as investors bought fewer bars and coins and buyers in China held back because of an economic slowdown.

The Indian market is showing signs of recovery, up 9% to 223.1 tons from 204.8 tons in Q3 2011 following increases in both jewellery and investment demand.

In comparison with Q3 2011 jewellery demand was up 7% to 136.1 tons and investment demand rose by 12% to 87.0 tons.

Indians appear to have acclimatised to recent price trends and have been buying into a rising market, WGC said.

In China demand fell 8% to 176.8 tons in Q3 2012 from 191.2 tons in Q3 2011 due to falls in jewelery of 6% and investment of 12% mainly as a result of negative sentiment surrounding China's slowing economy.

China's Jewellery demand was 123.8 tons in Q3 2012, due to a decline in purchases of 18k pieces and a notable slowdown in the expansion of the retail network, as stock-building reduced.

Investment demand was down to 53.0 tons Demand this quarter remains 19% above the longer term average.

Gold bar and coin purchases slid by nearly a third to 294 tons while jewelry buying dipped 9 percent to 449 tons. 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, WGC added.