In India, demand was disrupted by industrial action at jewellers, but the main reason for lower demand in most regions of the world is more to do with less appetite to buy due to economic hardship. Slower GDP growth in both developed and developing economies has meant consumers have had less money to spend on luxury items such as jewellery.

Currency factors have also had an impact, especially in India where a weaker Rupee has pushed local Gold prices to record levels. So far till last year the Rupee against the dollar had jumped till 57 levels. Not only has this choked off some demand, but it has also prompted jewellery scrapping, where old jewellery is offset against buying new jewellery.

Alarmed by the widening current account deficit - fuelled, in large measure, by rising gold demand met through imports - the Finance Ministry announced a series of steps aimed at discouraging the purchase of physical gold. The measures are also meant to unlock supplies locked up in gold exchange traded funds. While buying gold and platinum will become costlier, depositing gold with banks could prove rewarding.

The government has decided to increase the import duty on gold and platinum from 4 per cent to 6 per cent. In April-December of 2012-13 fiscal, gold worth $38 billion was imported. For the full year 2011-12, gold import amounted to $56.5 billion, accounting for almost half the current account deficit.

The move follows Finance Minister P. Chidambaram's in January statement that the government "might be left with no choice but to make it a little more expensive to import gold." On the same day, a working group of the Reserve Bank of India also suggested that fiscal measures to reduce the gold imports "be revisited."