The demand for gold jewellery in India was down by two per cent in the second quarter of 2010, compared to the same period last year.

India, the largest jewellery market, consumed 123 tonnes of gold during the quarter, according to World Gold Council (WGC) figures. Owing to the rise in prices, this translated into 20 per cent increase in value to Rs 216 billion.

Global jewellery demand declined by five per cent compared to year-earlier levels. Consumption totalled 408.7 tonnes during the second quarter of 2010.

However, the global investment demand for the yellow metal was robust, posting a rise of 118 per cent to 534.4 tonnes compared with 245.4 tonnes in the second quarter of 2009. Gold ETFs grew by 414 per cent to 291.3 tonnes, the second highest quarter on record. The demand for physical gold bar, too, rose 29 per cent from second quarter of 2009 to 96.3 tonnes.

In India also, the half yearly figures pointed to a robust growth in investment demand, which rose from 25.4 tonnes in the second quarter of 2009 to 92.5 tonnes in the second quarter of 2010. In value terms, gold investments rose from Rs 3,700 crore to Rs 14,800 crore.

The half yearly period also witnessed growth in jewellery demand from 163 tonnes to 272.5 tonnes. However, it has to be noted that the gold imports during the first quarter of 2009 was at an abysmal low.

“To date, 2010 has provided a clear indication of the diversity of gold demand. The gold market has improved significantly compared to the previous year, and in the process, has ensured that it has retained its intrinsic appeal,” said Ajay Mitra, managing director, West Asia and India, WGC.

WGC expects that India and China will provide the main thrust of overall growth in the metal’s demand in 2010.