Mumbai: Global gold demand during the third quarter of this year dropped by 9 percent to 915 tonnes as compared to the same period last year, according to a report by the World Gold Council (WGC).
This decline in demand was mainly driven by significantly lower inflows into exchange-traded funds (ETFs) in the US and softer quarter in the jewellery sector in India, according to WGC's Global gold demand in Q3 2017.
The global jewellery demand was down 3 percent in the July-September quarter as the newly introduced Goods and Services Tax (GST) and tighter anti-money laundering regulations around transactions in India deterred buyers.
The jewellery demand stood at 479 tonnes during the third quarter of 2017, compared to 495 tonnes in the same period of 2016.
While, the report said, ETFs had another quarter of positive inflows at 19 tonnes, it fell far short of the 144 tonnes influx into the sector in third quarter of 2016 due to good performance of equity markets.
The gold bar and coin demand grew by 17 percent driven largely by China due to currency depreciation and government restrictions on alternate investment options.
Further, the report said recycled gold fell 6 percent at 315.4 tonnes during the quarter under review.
However, recycling continued to normalise after the spike in the third quarter of 2016, almost directly in-line with the five-year quarterly average of 314.8 tonnes, it said.
After a strong first half, the WGC report said, mine production in the third quarter fell by just over 1 percent to 841 tonnes.
"It was a tough quarter for gold demand. India was coming to terms with GST and anti-money laundering regulations and, although we saw ETF inflows at 19 tonne, they were lower than last year," WGC's head of market intelligence, Alistair Hewitt, said.
But there were some real bright spots, like retail investment demand in China grew for the fourth consecutive quarter, the Turkish, Russian and Kazakhstan central banks added to gold reserves and after years of decline, there was an increase in the use of gold in technology, supported by the demand for high-end smart phones, he said.