Gold Demand Weakens, Hit by China and India

Global gold demand weakened in the second quarter as purchases fell in key consuming nations China and India, the World Gold Council said on Thursday.

"Total demand was 915 tonnes, a fall of 12 percent compared to the same period last year, due mainly to a decline in demand from consumers in India and China," the WGC said in a quarterly update.

"However, demand in Europe and the U.S. grew, driven by a mixture of increasingly confident jewelry buyers and strong demand for bars and coins. 

"Looking ahead, there are encouraging signs moving into what are traditionally the busiest quarters for gold buying in India and China," it added.

Nevertheless, the price of gold slumped in July, the start of the third quarter, striking its lowest level in more than five years at $1,072.35 an ounce.

It has since rebounded back above $1,100 an ounce.

Gold prices have been undercut also by a strengthening dollar, which makes commodities priced in the U.S. unit such as the precious metal more expensive for investment buyers holding rival currencies, in turn dampening demand.