That strong performance in 2016 was driven by the surprise result of the Brexit referendum and in the anticipation of the United States elections, which boosted demand from ETFs. India was coming to terms with GST and anti-money laundering regulations and, although we saw ETF inflows at 19t, they were significantly lower than a year ago.
By contrast, demand from other sectors consolidated: central bank demand was healthy in Q3, up 25% year-on-year to 111 tonnes, while bar and coin investment strengthened by 17% to 222 tonnes, albeit from a low base.
Gold demand for jewellery from India sank 25% for the third quarter to 114.9 tonnes, compared to the same time a year earlier, while Chinese gold jewellery demand climbed by 13% year on year to 159.3 tonnes.
A weak quarter in India was the main reason for the year-on-year decline in global demand, down from 495t in Q3 2016 to 479t in Q3 2017.
Juan Carlos Artigas, the Director of Investment Research at the World Gold Council, told ETF trends that ETFs are one of the most transparent and easy to monitor segments of the gold market.
"In contrast, in Q3 2017 the gold market was pulled in different directions: geopolitical uncertainty was a tailwind for gold, but higher interest rates and a stronger dollar were headwinds, especially for United States investors". Jewellery volumes continue to languish below longer-term average levels.
But a year later and demand was much weaker off the back of the strengthening United States dollar, and higher interest rates, which offset fears from the tensions around North Korea.
He pointed to a potential structural change in the demand for gold in industrial uses, with more smartphones, LEDs, and smart devices.
"Gold has been trading sideways lately as the market can't seem to make its mind up which way it is heading", CMC Markets analyst David Madden said in a note to clients Thursday.
The report said the total investment demand for Q3 2017 was down by 23 per cent at 31 tonnes in comparison to Q3 2016 (40.1 tonne).
On the production side after a strong first half, mine production fell by just over 1% year on year to 841 tonnes in the September quarter.