India is the world’s biggest consumer of gold but bullion-backed ETFs listed in the country are seeing assets decline along with prices.

Holdings in Indian gold ETFs fell more than 9% to $1.6 billion in June, the third straight month of lower assets, Bloomberg News reports.

“Indians are price sensitive, so they shy away from the market in times of higher volatility,” Chirag Mehta, fund manager at Quantum Asset Management, told Bloomberg. “Demand in the ETF market moves in line with demand in the physical market and we should see buying coming in during the festival season after the seasonally slack months of June and July.”

The amount of gold held in ETFs listed around the globe has dropped below 2,000 metric tons for the first time since May 2010, according to the report.

SPDR Gold Shares (NYSEArca: GLD), the largest bullion-backed ETF, is down about 21% the past three months. [iShares: Is Now a Good Time to Buy Gold?]

SPDR Gold Shares

Full disclosure: Tom Lydon’s clients own GLD.

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