Gold has become too expensive for most of the world's consumers
Global gold demand slumped 10% year-on-year in Q3 to 993 tonnes, according to a quarterly report from the World Gold Council published Tuesday.
Jewelry demand fell in nearly every consumer market that the council follows, sliding 21% year-on-year in the third quarter to 493 tonnes. The drop was the biggest in two years.
Meanwhile, Iran, Pakistan, Sri Lanka and Spain were the only countries where purchases rose.
Demand from India, which accounts for half of global consumer demand with China, continued to fall in the third quarter, and is down 30% year-to-date. Apart from higher gold prices, stricter regulation and lower disposable income in rural areas weakened the metal's appeal in the country, according to Capital Economics' Simona Gambarini.
However, the drop in gold prices in October may have encouraged stronger buying into the wedding and festival season, Gambarini said.
Rising gold prices also prompted some owners to take some profits and dump their holdings by recycling. The amount of gold recycled in the third quarter jumped 30% year-on-year to 341 tonnes.
Unlike retail consumers, however, investors continued to buy gold as a safe-haven asset, surrounded by political uncertainty.
"The drop in jewelry consumption and central banks' purchases is somewhat worrying but temporary factors played a role," Gambarini said in a note. "Our year-end target for gold prices is $1,300 per ounce, with potential further upside in the event of a Trump win."
Gold prices have gained 18% this year, and traded near $1,276.55 on Tuesday, down 0.13%.