Senior refinery technician Vincente Sandoval puts a gold "button" into a furnace to be further refined to form gold dore bars at Newmont Mining's Carlin gold mine operation near Elko, Nevada May 21, 2014. The dore bars contain approximately
Senior refinery technician Vincente Sandoval puts a gold into a furnace to be further refined to form gold dore bars at Newmont Mining's Carlin gold mine operation near Elko, Nevada May 21, 2014. Reuters/Rick Wilking

The world's appetite for the safe haven yellow metal gold has dropped in the second quarter of 2014 by as much as 16 per cent compared a year ago, the World Gold Council said on Thursday.

The drop was triggered by the waning gold-buying frenzy in China and India, the world's top two voracious buyers of the metal, of jewelry purchases.

Date from the WGC showed China only bought 193 tonnes of gold in the second quarter, while India, only 204 tonnes.

On a global wide scale, purchases of gold dropped 16 per cent to 963.8 metric tonnes from the 1,148.3 tonnes a year ago.

"Buyers in China and India were waiting to see a price trend develop," Marcus Grubb, managing director of investment strategy at the council, told Bloomberg. "It's a market still returning to its fundamentals. It was an exceptional year and quarter last year."

Grubb likewise said they expect India's appetite for gold to further decelerate to 850-900 tonnes in the full year, while China, the world's largest gold market, down to 900-1,000 tonnes.

Overall global jewelry demand fell in the latest quarter to 509.6 tonnes. WGC said China's purchases dropped 45 per cent, while India's was an 18 per cent drop.

The gold purchases of these two countries combined account for 60 per cent of world jewelry consumption.

"The data confirms our view that Chinese gold demand will stay relatively weak compared with 2013, which only serves to drag gold prices lower into the second half," economist Barnabas Gan said.

Gold is forecast to drop to $1,050 an ounce by the end of 2014, according to Goldman Sachs.