China’s third-quarter gold consumption has fallen dramatically, according to a report by the World Gold Council, by 39 percent in jewelry from 2013, which could well be a result of the continuing crackdown on graft ordered by President Xi Jinping.

Other discretionary items favored by Chinese officials have also dived sharply, with consumption of maotai, the gasoline-like liquor preferred by officials for banquets, falling as well. The price has been reduced to RMB950 after hitting a high at 2,480 in 2012 before the corruption crackdown started. Thirteen liquor companies reported falling revenues this year.

In another sign of the crackdown, Reuters reported that October appears to be the worst month on record since Macau opened its gaming industry to western interests. Revenues for October, according to Reuters, are expected to have fallen by as much as 20 to 23 percent year-on-year, the fifth straight month of declines after two years of rapid growth.

Otherwise, the global gold market, having seen flush times from demand in India and China, appears to be following the global economy downward, with prices falling 4 percent annually, at least partly as Chinese officials run for cover. The World Gold Council, in its third-quarter report, said gold activity has hit its lowest level in nearly five years.

For the past three years, China has held the world record for gold purchases. But purchases of jewelry have fallen to the lowest level since the last three months of 2009. Part of that has to be blamed on the moderating Chinese economy as well. Although officials have repeatedly said China would meet its 7 percent growth target, others behind the scenes said that is unlikely.

In the meantime, India again took over after lagging China since 2011, becoming the world’s largest gold consumer, buying 225.1 tonnes of jewelry, coins and bars in the third quarter, compared with 182.7 tonnes in China. The buying spree in India surged by 60 percent in the quarter.

India in fact imports so much gold that has been deemed unhealthy for the economy, contributing to downward pressure on the rupee as gold accounts for so much of the Indian current account. India imports around 1,000 tonnes of gold per year, not including what is smuggled in from Dubai and other Gulf centers, accounting annually for as much as 3.5 percent of GDP. The metal is merely stored, drying up liquidity without any productive use. The Reserve Bank of India, the country’s central bank, in 2013 launched a pilot program to buy back gold jewelry, bars and coins. Families, however, amass gold as both fashion accessories and as a hedge against economic disaster. According to Reuters, India's Tirupati temple, considered one of the world's richest, is estimated to hold gold worth up to $80 billion.

Alistair Hewitt, head of market intelligence at the World Gold Council, said in his report that both China and India will remain the world’s top importers and that demand will probably hit as much as 850-950 tonnes. Both, he said, remain very positive pillars of gold demand. A longer-term analysis of global gold demand and supply during the third quarter of 2014, the report said, shows a market in good health, with quarterly volatility in the US price among the lowest levels in the past two decades.

Nonetheless, gold for technological purposes fell by about five percent, with tech demand totaling 98 tonnes as fabricators and consumers substituted cheaper materials. Central banks made net purchases of 92.8 tonnes in the third quarter, slightly higher than the same period in 2013

“The broad themes surrounding gold supply during the first half of the year continued to play out in in the third quarter,” the report noted. “Recycling was well below last year’s levels, while mine production edged higher to exceed 800 tonnes for only the third time ever. Producers continue to show little appetite for hedging.”

Investment demand increased by 6 percent, reaching 204 tonnes, although stable prices, hovering at around US$1,160 per ounce, caused investors to hold back. Central Banks added a further 92.8 tonnes to their coffers, down by 7 percent in the third quarter as the volume of recycled gold continuing to shrink.