According to the World Gold Council, the global demand for gold has fallen 7 per cent to 990T, which is its lowest level in two years, during the second quarter of 2012 till June 2012.

The demand for gold dropped drastically in the largest market, India by a disappointing 38 per cent in the second quarter to 181.3 T. The demand for the shiny metal also fell in China by 7 per cent, the WGC said in its quarterly Gold Demand Trends report.

The council estimates that the demand for gold in India will fall further to 650-750 T in 2012 and China will become the largest consumer with demand in the range of 850 T. The council also pointed out that the gold investment demand declined 23 per cent to 302T during the second quarter from April to June 2012.

The WGC's managing director for investment research, Marcus Grubb said, "The real wild card is India. It depends how weak the latter part of the year is and/or how much of an improvement we see. It also depends on what happens from a macro perspective between now and the end of the year to catalyse more buying."

The fall in large markets like India and China pulled the global demand figure even as it was a record year for gold purchases by central banks. The total central bank purchases of gold rose to 157.5t.