China set to overtake India in gold imports this year: WGC

China set to overtake India in gold imports this year: WGC Mumbai: Even as gold demand has picked up in the country during quarter ended September, China may still become the largest importer of the precious metal by the end of this year, overtaking India marginally, the World Gold Council said Thursday.

"The demand here has picked up during the third quarter (July-September), while in China it lost the momentum. However, in the fourth quarter both the countries are showing very strong demand for gold and we feel the competition will be neck to neck with China ending up ahead of India.

"But the difference is likely to be very close to up to 50 tonne," WGC Managing Director (Investment) Marcus Grubb said.

In the July-September period of this year, the domestic demand improved mainly due to Diwali demand and the upcoming marriage season. However, in China it slipped following slowing domestic demand, he said.

"The fall in Chinese demand coincides with weaker economic numbers there in Q3," Grubb said, adding, the situation is stabilising and recovery is already on and that the last quarter is traditionally very strong for both the countries, he added.

The domestic demand for gold is usually very strong in the fourth quarter due to festive and marriage season and in China due to the pick-up in the economy.

Due to good recovery in Q3, the country is at present ahead of China with 612 tonne of gold imports as of now, while China has imported 605 tonne, he said.

Meanwhile, according to the WGC's 'Gold Demand Trends Report' released today, the global demand for the yellow metal in Q3 declined 11 percent to 1,084.6 tonne from the record 1,223.5 tonne in Q3 of 2011.

This drop in demand is in comparison with exceptional demand in the third quarter last year.

The demand in Q3 this year was above the five-year quarterly average of 984.7 tonne, it said.

"Gold is beginning to re-establish itself as part of the fabric of the financial system. In the medium term, the quantitative easing initiatives in the West and the continuing growth story in the East, particularly in China and India coupled with the seasonally strong quarter coming up in Asia, are excellent indicators for further growth," Grubb said.

Amid continued global economic uncertainty and elections in the US and leadership change in China, it is clear that gold will continue to remain a vehicle for capital preservation, as evidenced by increase in global ETF investment in Q3, which jumped up 56 percent and continued purchase by central banks which are the ultimate long-term investors, Grubb added.

Major central banks bought 97.6 tonne during the quarter.

PTI