Global gold consultancy GFMS Thmoson Reuters said that worldwide demand for physical gold during the quarter ended June 30, 2015 was 858 tonnes, a 14.2% drop compared to the same period a year ago and 15.5% when compared to the demand in the previous quarter. This is the overall lowest level of demand seen since 2009.

The decline was noted across both the jewellery and investment sector; while jewellery registered a 9% drop, demand for gold bars and coins was down by 12%. Global jewellery production was down 6%, GFMS said.

China registered the major decline during the quarter. Demand for gold bars and coins at 35 tonnes was down 26% as compared to last year, while jewellery demand at 102 tonnes was down by 23%.

GFMS reports that the fall in gold demand was linked to stock market growth in China, and though the market fell in June after nearly 5 months of a strong surge, investors were still cautious about putting their money into the yellow metal.

In India, which was the largest consumer in both segments during the quarter, jewellery consumption rose 2.4% to 158 tonnes and retail bar and coin investment was steady at 49.5 tonnes. Demand was partially boosted by the fact that Akshay Tritiya, one of the largest gold buying days in India, fell during this quarter.

However, India also saw gross imports falling to 183.9 tonnes, a decline of 10% as compared to the same period in 2014, and the lowest in five quarters, GFMS said.

For the first half of 2015, gold demand in China and India remained neck-to-neck, with China marginally ahead at 394 tonnes as against 392 tonnes in India.

Amon other big consumers, Turkey saw demand dropping by 39% to 12.5 tonnes; Russia recorded a fall of 12.5% to 15.0 tonnes, while America saw demand rising by 12.7% to 26.5 tonnes. Even official sector purchases dropped to 45 tonnes, a decline of 61.9.

GFMS believes that the market has already factored in the proposed Fed rate hike in the US and predicts an average gold price of $1,135 per oz in Q3, a little lower than the average Q2 price of $1,192. The consultancy expects some recovery in the last quarter of the year with average price likely to reach $1,175.