Spiralling gold prices resulted in global demand falling 17 per cent in the second quarter of 2011 over the same period a year earlier, the World Gold Council (WGC) said Thursday. The council added that Asian buying and global economic concerns will drive consumption for the rest of the year. In its report ‘Gold Demand Trends\', the council said demand in the second quarter totalled 919.8 tonnes as against the \"remarkably strong\" levels of 1,107 tonnes in the second quarter last year when Europe\'s debt crisis boosted the appeal of the precious metal. In value, meanwhile, the council said that gold consumption went up almost five per cent year-on-year to $44.5 billion (Dh163.40 billion), the second-highest amount ever. Article continues below Gold was trading at $1,822.79 an ounce yesterday, according to the London Metal Exchange. And the quarterly average gold price increased by 26 per cent to a record high of $1,506.13 (as per the London PM fix), according to the council\'s report. Gold hit a record high of $1,814.95 an ounce on August 11. The high price pulled down gold investment in the second quarter by 37 per cent to 359.4 tonnes year-on-year from 574.2 tonnes in the second quarter in 2010, WGC said in the report. Market experts, however, warn of further increases. \"Gold had spiked by over 26 per cent in this year and most of this rise has been in the third quarter. Thus it is quite possible that gold volumes will show a significant drop in the third quarter and if prices refuse to cool down, demand drop could be drastic as we approach the year end,\" Pradeep Unni, senior commodity analyst at Richcomm Global Services, told Gulf News. He added that investing in gold through futures and options provides \"high leverage\" and helps take advantage of the short-term and medium-term price movement. However, the higher price of gold did not hurt demand in two countries — India and China, which experienced demand growth of 38 per cent and 25 per cent respectively during the second quarter over the corresponding period of 2010. The two \"standout\" markets emerged as major contributors to growth in both jewellery and investment demand. They accounted for 52 per cent of total bar and coin investment and 55 per cent of global jewellery demand in the second quarter, according to the WGC. \"This growth is likely to continue, due to increasing levels of economic prosperity, high levels of inflation and forthcoming key gold purchasing festivals,\" the council stated in the report. Central bank demand Central banks\' purchases in the second quarter more than quadrupled compared to the levels in the corresponding period of 2010, according to the council\'s report. Central banks are likely to remain net purchasers of gold. \"Purchases of 69.4 tonnes during the second quarter of 2011 demonstrated that central banks are continuing to turn to gold to diversify their reserves,\" WGC said in the report. It added that gold supply was 1,058.7 tonnes in the second quarter, a four per cent decline from 1,108.3 tonnes in the same period last year, as a result of an increase in net purchases by central banks. Ten years ago when the gold price touched $1,000 an ounce, it seemed improbable, and now the industry forecast is pegged at approximately $2,000 by 2015. Asked if the high price of gold would be reached even earlier than that, Unni told Gulf News: \"Considering the current fundamentals, further gains in gold are quite possible, but it will be difficult to envisage a high in the near term.\" He added that gold remains \"vulnerable\" if investors have to sell positions to cover any sharp fall in equity markets. As per WGC\'s estimates, gold demand in the second half of 2011 is expected to remain \"strong\". \"The strength of demand in India and China, coupled with an overall drop in recycling activity this quarter, demonstrates that consumers have adjusted to the current price environment and expect the upward price trend to continue,\" Marcus Grubb, managing director, investment, at the WGC, said in the report. Dubai The rising price of gold is unlikely to impact the trading patterns in the UAE, according to commodity analyst Pradeep Unni. \"The UAE, especially Dubai, is largely a trade centre and also a favourite tourist destination. Thus, jewellery trade in the region is unlikely to get effected by the price spikes or drops,\" he said, adding that gold trading in Dubai constitutes to about \"16 per cent\" of the global gold trade. Retailer Damas, too, does not expect much of an impact on sales in value terms. \"Our belief is that consumers have become slightly accustomed to high gold prices. There is even a strong consumer sentiment that the price might increase further,\" said Raj Sahai, director, retail, at Damas. The UAE emerged as the most resilient market in the Middle East according to WGC report, with second quarter tonnage demand just one per cent below year-earlier levels at 16.1 tonnes.