New Delhi, Nov 8 (IANS): India's demand for gold in the third quarter (July-September) dropped by 28 per cent to 194.8 tonnes, the World Gold Council said in its report on Tuesday.
The Indian demand was around 271.1 tonnes during the corresponding quarter in 2015.
In terms of value, India's Q3 2016 gold demand was Rs 55,970 crore, a drop of 12 per cent compared to the similar quarter in 2015 when it stood at Rs 63,660 crore.
"While an elevated price level was an obvious factor for the drop in volume, other issues appear to have had an impact on demand -- such as the trade strike following the introduction of excise duty, the regulation on PAN card for purchases above Rs 2 lakh and the subdued sentiment on gold buying when the income disclosure scheme was running," said Somasundaram PR, Managing Director, India, World Gold Council.
The World Gold Council has projected the full year demand to be in the range of 650-750 tonnes.
"Good monsoon and a drop in the gold price ahead of Diwali augur well for strong seasonal demand in Q4 that will likely restore the demand trajectory to normal levels," Somasundaram said.
Total jewellery demand in India for third quarter of 2016 was down by 28 per cent at 154.7 tonnes. Also, total gold investment demand for the quarter under review fell by 30 per cent at 40.1 tonnes.
Globally, gold demand reached 993 tonnes in the third quarter of 2016, 10 per cent less than in the similar period in 2015.
"Net inflows into Exchange-traded products (ETPs) helped drive a sharp increase in investment demand, but this was not enough to offset falls in other areas, notably jewellery and purchases by central banks," the statement said.
"We continued to see flows into gold-backed ETPs in Q3, taking year-to-date inflows at the end of September to 725 tonnes. Institutional investors have looked to hedge against uncertainty stemming from geopolitical risk, including Brexit, the US presidential race and the potential impact of elections in France and Germany next year (2017)," said Alistair Hewitt, Head of Market Intelligence at the World Gold Council.
"In addition, negative interest rates -- a theme ever present this year -- continued to underpin institutional demand," he added.