Gold demand surges in China, weakens globally

China's demand for gold jumped 20 percent to 294 tonnes in the first quarter of 2013, while global gold demand slid 13 percent in the period, according to a new World Gold Council (WGC) assessment.

The WGC recorded demand in China for 185 tonnes of gold jewelry in the first quarter, up 19 percent year on year. Chinese demand for gold coins and bars also hit a quarterly record of 110 tonnes, up 22 percent, according to the WGC report.

In contrast, global gold demand fell 13 percent in the first quarter to 963 tonnes. The value of the gold demanded globally stood at 51 billion U.S. dollars, down 16 percent compared to the corresponding quarter last year.

India and China, the two major driving forces of the world gold market, contributed a combined 62 percent of Q1 global jewelry demand, the WGC said.

Guo Bosi, director general manager of the WGC's investment department, said the increase in demand in China was due to traditional first quarter seasonal strength related to Chinese New Year purchasing.

China's appetite for gold has remained strong as a gold rush was prompted by an abrupt drop in the price of the precious metal in April. Queues of people have lined up at gold stores around the country to purchase large amounts of jewelry and gold bars.

Experts said the price slump gave common Chinese a window to invest their increasing wealth, though a large number of financial institutions and researchers believe that gold is greatly overvalued.