Fuelled by inflationary pressure, India's demand for gold jewellery slipped significantly by 47 per cent during second quarter of the current calendar year, according to the latest World Gold Council report.
Jewellery demand in India during April-June stood at 118 tonnes, down by 47 per cent from same period previous year, World Gold Council stated in its report today.
Retail investment followed the same trend as the jewellery market. Investment demand fell by 41 per cent to 43.4 tonnes as investors were deterred by price volatility combined with inflation, which reduced funds available for saving, it said.
"As expected, the continued high and volatile gold price, together with economies across the globe witnessing inflationary pressures and a tightening of consumer wallets, dampened consumer demand for gold in tonnage terms during the quarter," WGC Chief Executive Officer James Burton said.
The US also saw a slump of 30 per cent in its gold jewellery demand at 33 tonnes during second quarter of 2008.
Meanwhile, global demand for gold in terms of volume dipped sharply by 19 per cent at 735.6 tonnes during the quarter.
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A major decline was seen in jewellery demand, which fell by 24 per cent at 504 tonnes, the report said.
Investment demand was down by four per cent at 119.8 tonnes in terms of volume despite a number of markets turning to gold as a safe haven for investment in times of rising inflation and unstable equity markets, WGC noted.
"Investment for the quarter was affected by profit taking, but we also saw a surge in investment demand in several markets that are feeling exposed to the economic downturn," Burton said.
Gold supply was one per cent higher during second quarter than a year earlier. Mine output fell by four per cent at 590 tonnes during the period under review, WGC added.