China is set to surpass India as the world's top gold consumer this year, the World Gold Council (WGC) predicted.
The demand for gold in China, the world's largest producer, rose by 20% to 769.8 tonnes last year, driven by surging demand for jewelry and investment, while consumption in India, the world's largest consumer, tumbled 7% to 933.4 tonnes as a result of volatile gold prices and a weak rupee, the WGC said in a report Thursday.
"Looking particularly at Asia, there was a major boost to the overall figures from the increase in Chinese demand, which is a trend that we see continuing over the next year.
"It is likely that China will emerge as the largest gold market in the world for the first time in 2012," Marcus Grubb, managing director for Investment at the WGC.
The WGC's prediction came after a surge in gold demand in the Chinese market last year, with imports from Hong Kong, a proxy for its import demand, more than tripling to 428 tonnes from the 2010 level, the Global Times reported.
In the fourth quarter of last year, China was already the largest consumer of gold, with demand reaching 190.9 tonnes of gold, compared with India's 173.0 tonnes, the WGC said.
The trend of surging demand in the market will continue till the end of this year despite signs of growth slowdown, according to the report.
"China, with its large reserve base, adjustable exchange rate and political decisiveness, may be better positioned to tackle a slowdown posed by falling exports and the policy tightening pursued during most of 2011," the WGC said.
"The surge in demand was caused by concerns of high inflation, the country's monetary policy tightening, as well as gloomy global economic prospects, driving investors away from property and stock markets to other investment channels to protect their wealth," Zhang Yongtao, vice president of China Gold Association (CGA), told the Global Times.