Global gold demand dropped 11 percent in the three months to September from record levels seen in the same period last year, dampened mainly by fading Chinese fervour as its economy slowed, with stronger Indian demand stemming a larger fall, the World Gold Council (WGC) said.
Chinese gold consumption fell 8 percent in the July to September period to 176.8 tonnes, the WGC's quarterly demand trends report showed on Thursday, with both jewellery and investment demand hurt by a slowing economic growth.
Data last month showed China's economy slowed for a seventh straight quarter in the July to September period. Chinese bar and coin investment dropped 12 percent to 53 tonnes, while jewellery buying fell 5 percent to 123.8 tonnes.
The fall in Chinese demand coincides with weaker economic numbers in China in Q3, the WGC's managing director of investment research Marcus Grubb said. There is some evidence that the economic situation is stabilising in China and recovery is starting... it's possible that the stimulus measures have worked and the economy has bottomed out.
If that's true, we won't see a repeat of this Chinese weakness in the fourth quarter, he said.
China is second to India as the world's biggest gold consumer. Indian demand rose in the last quarter by 9 percent to 223.1 tonnes, reversing the trend of the previous three quarters, with pent-up consumer demand lifting the market.
First-half buying was dented by jewellers' strikes, a hike in import duty and a dearth of auspicious days for weddings.
Finally we're starting to see the Indian market come back, Grubb said. And the anecdotal evidence is good looking forward to fourth quarter demand - premiums are high again in the Mumbai market, and the strength of the rupee has meant you have seen rupee prices moderate somewhat.
India's consumer gold demand remains down 24 percent in the first three-quarters of the year, however, and is unlikely to record a net increase in 2012 as a whole, the WGC said.
JEWELLERY, BAR DEMAND ABATES
Global jewellery consumption dipped 2 percent to 448.8 tonnes, while coins and bar demand fell 30 percent. European investors, particularly in German-speaking markets, accounted for half of the 128.1-tonne decrease in bar and coin demand. European investment is lower than it's been for some time in the retail market. You're not seeing that insurance demand and safe asset demand from Germany and Switzerland that we were seeing last year, Grubb said.