CHENNAI: High prices and falling disposable incomes due to the economic slowdown put a damper on gold demand in the country. The yellow metal saw a 32% year-on-year drop in demand by volume to 124 tonnes in the July-September quarter from 183 tonnes in the same period in previous year.Data from World Gold Council (WGC) India showed that the jewellery demand fell by 32% to 102 tonnes, and by value it dropped 17% to Rs 33,851 crore from Rs 40,687 crore. Investment demand also saw a 35% drop (by volume). However, there has been a 59% increase in recycled gold during the quarter, to nearly 37 tonnes from 23 tonnes registered in the July-September quarter of 2018.Spot gold prices (24 carat for 10 grams) for the quarter was Rs 39,850, a rise of nearly 28% year-on-year.The report added that the sharp drop in demand was due to low consumer confidence after a lot of noise about an economic slowdown. The increase in custom duty in the July Budget to 12.5% from 10%, also did not help, said jewellers. Forecasting a drop of 8% from 2019, WGC India managing director Somasundaram P R said gold demand could be around 700 tonnes, the lowest since 2016 when jewellers saw the impact of PAN and imposition of custom duties.“We have revised the outlook of total gold demand for the year to 700-750 tonnes from the 750-850 tonnes that we maintained earlier. Weak rural sentiments have also impacted gold demand. Excess monsoon has damaged crops and hence, rural demand has also seen a dip,” he added.Jewellers said that the demand in the quarter at the retail level was down 40% and purchases were made in lightweight jewellery categories. “The demand in July was steady, even when the prices began to increase because of the increase in import duty but August and September saw the biggest fall. Some people are also holding on to their gold as they wait for prices to settle so that they can liquidate it for better returns,” said NAC Jewellers MD N Ananthapadmanabhan.