Although total identifiable demand for gold fell 19% year-on-year in the second quarter of 2008, demand in terms of value rose 9% to a new quarterly record of $21.2 billion, the World Gold Council (WGC) said this week.

In tonnage terms, demand slid to 735.6 t, dampened by “high and volatile” prices, the industry body said in its quarterly 'Gold Demand Trends' report.

India was the biggest contributor to the decline in demand for the second consecutive quarter.

While the average gold price, at $896.29/oz based on the London pm fix, was well below the peak of $1,011/oz seen in mid-March, it nevertheless represented a 34% rise on the average price of the second quarter of 2007.

In volume terms, jewellery was the biggest contributor to the overall annual decline, falling by 158.7 t, or 24%, to 504 t.

“However, despite the adverse economic conditions affecting much of the globe, consumers continued to increase their spending on gold jewellery,” the WGC said.

Identifiable investment demand was also softer by volume than year-earlier levels, as some investors took profits, but was still more resilient to the high gold price than jewellery demand.

When viewed in value terms, investment spending was 29% higher year-on-year, at $3.5-billion, and and industrial demand grew by 27% to $3.2-billion.

Gold supply grew by 1% in tonnage terms compared with year-earlier levels, after a 13% increase in scrap due to the higher gold price was partly offset by a 4% reduction in mine output.

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