Gold demand slumped in the second quarter this year as demand from China and India - the world’s two biggest consumers slowed.

Gold demand slumped in the second quarter this year as buying from China and India - the world’s two biggest consumers of the metal - slowed.

According to the World Gold Council, total demand for gold was 964 metric tons in April to June, down 16 per cent compared with 1,148 tons during the same period in 2013.

The environment for gold has been, in recent weeks, relatively calm when compared with last year, when the yellow metal fell sharply as expectations increased that the US Federal Reserve would taper its quantitative easing programme and hence, so it was argued, bolster the dollar. The heavy QE programme had been a reason, commentators said, for the rise in the gold price in the first place. Three years ago it rose to a record high over $1,900 per ounce.

“In the context of an exceptional year last year where we saw record consumer buying and investor sell-offs, this quarter’s demand continues to demonstrate a return to long-term trends, illustrating the uniquely balanced nature of the gold market,” said Marcus Grubb, managing director of investment strategy at the World Gold Council.

“Jewellery consumers continued to digest the exceptional purchases of 2013 and investors also rebalanced, pulling back from the extremes we saw last year. Overall the gold market is stabilising following the extraordinary conditions we saw in 2013,” he added,

India is anticipated to buy between 850 and 900 tons of gold this year, down from 975 tons last year. China is expected to buy between 900 and 1,000 tons, down from the record 1,275 tons of demand last year, the Council added.

At the same time consumption by Central banks shot up given the turbulence in the Ukraine and the Middle East over the summer months. Banks bought up a net 118 tons of gold in the second quarter, a 28 per cent jump from the year before. The major buyers were the central banks of Russia and Kazakhstan - which also reflects the appetite of emerging-market countries for a hedge against dollar exposure in their reserves.