Gold demand during April-June declined 25 per cent to 154.5 tonnes due to unseasonal rains in the first quarter that damaged crops and the shrinking of wedding dates, according to the World Gold Council (WGC).
The demand during the second quarter of 2014 stood at 204.9 tonnes, WGC said in Gold Demand Trends report for Q2 2015.
India's Q2 2015 gold demand in terms of value fell 26 per cent to Rs 37,590.2 crore compared with Rs 50,778.1 crore in Q2 2014.
"Consumer demand in India fell 25 per cent to 154 tonnes in the April to June quarter, due to a buoyant stock market, a softening rural economy affected by unseasonal heavy rains in Q1, which damaged crops and fewer auspicious days impacting wedding-related demand.
"If, however, we look at the first half of the year, then the fall was only 7 per cent to 346.2 tonnes compared with 372 tonne in the first six months of 2014," WGC Managing Director, India, Somasundaram PR told PTI in Mumbai.
"Especially, small jewellers in tier II and III towns were affected due to this decline in consumer demand", he added.
"The demand, however, was robust during festivals like the Akshaya Tritiya, but people showed cautious approach towards gold expecting a weak monsoon", he noted.
Total jewellery demand was down 23 per cent at 118 tonnes compared with 152.6 tonne in the same quarter last year. The value of jewellery demand fell 24 per cent to Rs 28,703 crore from Rs 37,807 crore in the corresponding period of 2014.
Similarly, the total investment demand also declined 30 per cent to 36.5 tonnes against 52.3 tonnes in Q2 of 2014.
In value terms, gold investment demand went down 31 per cent to Rs 8,887.2 crore, from Rs 12,971.1 crore in the same period last year.
Total gold recycled in India in Q2 of 2015 was 24 tonnes compared with 22.5 tonnes in Q2 of 2014.
Somasundaram said going forward as most parts of the country have had good rains that will help the rural economy, the full-year gold demand expectations are likely to be in the range of 900-1,000 tonnes, with a strong estimate for lower end.
"Our expectation though for the rest of the year is that demand will be robust, for a number of reasons. The upcoming wedding and festival season in India suggests healthy prospects for the jewellery market and we have seen a positive uptick in demand in the last few weeks as Indian consumers are taking advantage of the softening in the gold price," he added.
On imports during the last two quarters of this year, he said demand during the second half of the year will be 25-30 per cent more than the corresponding period of last year and the shipments will track demand.
Demand during the last two quarters of 2014 stood at 436 tonnes.