The precious metal is typically seen as a safe haven for investors during difficult economic times. With the major developed economies recovering, many investors now see little reason to own the precious metal.
Marcus Grubb, managing director for the investment unit at the World Gold Council, said the gold market was going through a period of rebalancing as predominantly American investors in exchange-traded funds dumped their holdings and a wave of demand came from consumers.
India's love for gold hurts economy
Jewelry demand rose by 37% in the second quarter, while bar and coin demand surged by 78%.
China and India -- which are the biggest markets for gold -- were not the only countries seeing a spike in buying. Demand from consumers in the Middle East and Turkey was also on the rise, with jewelry demand up by 33% and 38%, respectively.