According to the World Gold Council (WGC), the domestic gold demand may drip drop by around 33 per cent at about 700 tonne due this year.
"The overall demand in the country for this year is likely to be in the range of 688-700 tonnes, which will be around 28-33 per cent lower than last year," WGC Managing Director, India and Middle East, Ajay Mitra said here.
However, the agency pinned hope that the demand was likely to recover in the second half of this year following the upcoming festival and marriage season.
In the first half, the demand declined by 15 per cent in value at Rs 1,05,867 crore compared to Rs 1,24,649 crore in the corresponding period in 2011.
In terms of tonnage, the demand went down by 36 per cent at 383.2 tonnes from 596 tonnes in the first half of 2011.
Mitra further said the demand was affected by a number of factors like slowing GDP growth, record high local gold prices and fluctuations in the exchange rate.
Jewellery demand also decreased by 8 per cent in value terms to Rs 72,634 crore in the first half of this year compared to Rs 78,947 crore in the same period last year, as per the figures.