Global demand for gold fell to its lowest level since 2009 in the first half of this year as an improving US economy drove investors to riskier assets and consumers bought less gold jewellery, particularly in India where an inauspicious period for Hindus led to fewer weddings.
Central bank purchases also slowed, although demand for gold used in electronics such as smartphones, games consoles and vehicles hit a three-year high.
Global demand for gold was 1,959.9 tonnes between January and June, the lowest first-half total since 2009, according to the industry-funded World Gold Council.
In the second quarter, demand fell 4% year on year to 964.3 tonnes. Purchases of gold for investment fell 9%, driven by a 46% decline in buying by gold-backed exchange-traded funds.
Investment was weakest in North America, where funds recorded outflows of 30.7 tonnes in the second quarter because of a stronger US economy. Meanwhile, European investors sought refuge in gold at a time of political uncertainty, caused by the Italian elections. In China, an escalating trade dispute with Washington and falling stock markets lifted investment demand.
A weaker rupee and the imminent monsoon also dragged down jewellery purchases in India, the world’s biggest gold market. Other declining local currencies meant consumers in many countries did not benefit from a fall in the dollar-denominated gold price. It dropped 5.5% between April and June to $1,250 (£959) an ounce.