LONDON, May 23: Worldwide gold demand fell 16 per cent in the first quarter of 2006 as jewellery buyers were discouraged by the metal’s high price, which hit 26-year peaks during the period, the World Gold Council said Tuesday.

Demand for gold in tonnage terms sank to 836 tons during the first three months of the year, compared with 990 tons in the same period of 2005, said the London-based organisation.

That included a 22-per cent slump in demand from the jewellery sector to 535 tons, according to the WGC.

Gold prices had hit $730.40 per ounce in London trading on May 12, the highest level since 1980, as investor buying escalated amid geopolitical concerns, particularly over Iran’s disputed nuclear ambitions.

Sustained interest from different groups of institutional investors drove the gold price to new 26-year highs in the first quarter of 2006, the WGC added.

Metal prices have since slumped on profit-taking. On the London Bullion Market on Tuesday, the price of an ounce of gold stood at $666.70, up from $652.50 late on Monday.

In India — the world’s biggest consumer of gold — demand plunged by 27 per cent to 145 tons over the first quarter.

That was due to a 38-per cent fall in consumption by India’s jewellery sector. The country accounts for almost 20pc of worldwide demand. Emerging economic powerhouse China took third place, with demand rising by 2.0 per cent to 68.40 tons.—AFP