Demand for gold has tumbled over the past quarter as prices for the precious metal reached a 25-year high, Bank of Nova Scotia said today in a quarterly report on precious metals.

Expectations of an increase in gold buying have vanished over the quarter, which is traditionally a strong demand period because of festival-going in the Middle East, wedding season in India, and the lead-up to the holiday season in other parts of the world, the bank said.

“The rapid increase in price has forced physical buyers to the sidelines in India, China and the Middle East,”said Bernard Hunter, who is director of the bank’s ScotiaMocatta precious metals division, in a release.

“The lack of actual jewelry demand in these countries is slowly squeezing jewelry manufacturers and retailers to the point where some manufacturers are considering closing down parts of their operations in a bid to save costs,” he said.

During the third quarter, the London closing price of gold ranged from a low of US$418.35 an ounce to a high of US$473.25. Since then, however, the price of the precious metals has climbed even higher, touching US$536.50 on December 12. That marked gold’s highest point since April 1981.

On Thursday, the spot gold price in New York was US$508.10 per ounce.