World gold demand fell 9 percent in the second quarter to 719.5 tonnes as rising prices and the impact of the global recession curbed jewellery consumption, the World Gold Council said on Wednesday. However, a sharp rise in identifiable investment demand to 222.4 tonnes from 151.9 tonnes a year earlier limited the decline, with demand for gold-backed exchange-traded funds rising sharply year-on-year.
"The global economic downturn has certainly had a major impact on the purchasing power of gold consumers, as have high local prices and dollar volatility," WGC chief executive Aram Shishmanian said in a statement. ETF inflows slipped to 56.7 tonnes in the second quarter from a record 465.10 tonnes in the first three months of the year, but were still well ahead of last year's second-quarter inflows of just 4 tonnes.
Net retail investment - which covers small investment products such as bars and coins - climbed 12 percent year-on-year to 165.7 tonnes. Jewellery demand fell 22 percent year-on-year in the second quarter to 404.1 tonnes from 517.8 tonnes previously. Demand from India, traditionally the world's biggest gold consumer, slid 31 percent to 88.0 tonnes.