Gold imports generally peaks during September to December period in India, but the trend is going to change this year.

According to the Bombay Bullion Association, India's leading gold trade body, India's gold imports during peak demand season of September to December will likely drop by 40 per cent year-on-year to 200 tonnes.

Prithviraj Kothari, president of the Bombay Bullion Association, said poor monsoon, fewer wedding dates and near record high prices of the metal would drag demand down drastically.

More than half Indian population depends on the rural economy, which is facing its second drought in just four years due to poor monsoon, which can push food prices drastically up and erode people's spending power. This will lead to fall in demand for all consumer goods, ranging from tractors to gold.

Increase in import duties and record-high local prices due to depreciation in the value of rupee have also hit buying.

Indian consumers' demand for gold in investment and jewellery dropped 38 per cent to 181.3 tonnes in the second quarter of current year.

Meanwhile, the World Gold Council has revealed that gold purchases by central bank of various countries hit a record high of 158 tonnes in the three months through June. This was the highest figure for gold purchases by central banks since second quarter of 2009 and more than twofold the 66 tonnes purchased by central banks in the same quarter 2011.