Gold imports by India slumped 56 per cent in the second quarter after record prices discouraged jewelry buyers and investors, according to the World Gold Council.

Overseas purchases plunged to 131 tonnes in the three months ended June 30 from 301 tonnes a year earlier, the producer funded group said in a report.

Demand for jewellery dropped 30 per cent to 124.8 tonnes, while for coins and bars for investment it slid 51 per cent to 56.5 tonnes, it said. Bullion futures in India rallied to a record last quarter even as global prices declined 4.3 per cent, as the local currency slumped to an all-time low against the dollar. Global gold demand fell 7.1 per cent in the April-June period to 990 tonnes because of higher prices and concerns about economic growth, the council said.

”With the economy slowing down, consumers tend to hold on to cash,” said Ajay Mitra, managing director, India and the West Asia at the council. The worst is over and there is going to be a recovery in demand because of the festive season, he said.

Asia’s third-largest economy expanded 6.5 per cent in the year ended March 31, the slowest pace since 2003, and the rupee declined to a record of 57.3275 per dollar on June 22, making imports costlier.

Jewellers held a strike in March and April to protest government taxes on imports, further trimming demand, the council said.

Gold demand in India may climb starting next month with the beginning of major festivals, council’s Mitra said.

Consumption may total 688 tonnes to 700 tons this year, compared with 933.4 tonnes in 2011, he said. Below-average monsoon rain this year has stoked concerns about rural jewelry demand, given people’s dependence on farming and the potential impact of a poor harvest on income levels, the council said.

The monsoon rains, which account for 70 per cent of the country’s rainfall, were 15 per cent below a 50-year average, the worst in three years, the India Meteorological Department said.