Gold demand of 964 tonnes in the second quarter showed a 16 per cent drop from the same period last year, despite more purchases by some central banks, according to World Gold Council.
In the second quarter of 2013, gold demand reached 1,148.3 tonnes, even though the London gold price was as high as $1,414.8 per ounce compared to $1,288.4 in the second quarter of 2014.
Its "Gold Demand Trends" report released today showed that central banks remain a solid element of demand with net purchases of 118 tonnes in the second quarter, representing a 28 per cent increase year-on-year.
In the past few years, central banks have been net purchasers of gold. The sector's net purchases totalled 544.1 tonnes in 2012, 409.3 tonnes in 2013 and 242 tonnes in the first half of this year.
Marcus Grubb, WGC managing director, investment strategy, noted that the overall drop in gold demand was not surprising.
"Jewellery demand weakened year-on-year, but the broad, 5-year uptrend remains intact. Investment demand pulled back from the extremes seen during last year as relatively stable price conditions contributed to the subdued environment. Mine production grew 4 per cent year-on-year for a second consecutive quarter, contributing to a 10 per cent increase in gold supply," he said in the report.