Rome: China is set to overtake India to become the world's top gold consumer this year, as the driving forces in the market shift from West to East, an industry association said on Tuesday.
"Most likely this year we will see China overtake India slightly," Albert Cheng, the World Gold Council's managing director for the Far East told AFP in an interview on the sidelines of a conference in Rome.
"A 1,000-ton market will probably be achieved" for China, he said, out of a global yearly market of around 4,400 tons made up of 2,800 tons from mine production and 1,600 tons of already existing gold.
Cheng said the sharp rise in consumption was helped by fast-paced economic growth and a lack of government restrictions on the market, making gold easily accessible for ordinary Chinese.
He said there were now an estimated 100,000 gold jewelry stores in China and 20 banks selling gold ingots or gold-linked investment accounts.
"India and China are twin engines for the market. They account for 60 percent of global consumption," he said, adding that India's consumption has been going down for two years.
Rupee depreciation and high customs duties on gold imports were two major reasons and attempts to get Indians to trade the estimated 20,000 tons of gold in private hands have had little effect, he said.
Speaking on the sidelines of the conference organised by the London Bullion Market Association, Marcus Grubb, the Council's managing director for investment, said demand in China and India would continue to sustain gold prices for the foreseeable future.
"There are 2.5 billion people who are going to get richer. There's going to be a higher population, they're going to buy more gold," he said.
The London-based World Gold Council is the main market development organisation for the industry and includes all the top gold mining companies.
Gold prices spiked during the global financial meltdown and Europe's debt crisis because gold is seen as a safe haven in troubled times.
But, mainly due to better economic forecasts, they have fallen by up to 20 percent this year and the price is now around USD 1,340 (989 euros) an ounce.