China's gold consumption has surged to a new record in 2013, despite a demand slowdown in the international market, as consumers took advantage of lower prices and bought more jewellery and gold bars.
The China Gold Association (CGA) said that gold consumption in the country surpassed the 1,000-tonne mark in 2013, rising 41.4% on year to 1,176.4 tonnes. China produces only one-third of its gold requirement.
The CGA noted that the rising amount indicates that China would overtake India as the world's largest consumer of gold. Indian gold demand increased only 4.8% in 2013, as the government took measures to discourage gold imports to rein on a huge trade deficit.
Demand for gold jewellery and bars in China increased by 42.52% and 56.57% to 716.5 tonnes and 375.73 tonnes, respectively, according to the association.
Meanwhile, demand for gold coins, which are often bought for gifting, declined 1.07% on year to 25.03 tonnes. The trend was in line with the country's anti-corruption campaign.
The country remains the largest producer of gold for the seventh straight year, as it produced 428.16 tonnes of gold in 2013, up 6.23% year on year, according to the data.
A decline in the prices of gold prompted more purchases in China. In the second quarter of 2013, international gold prices declined to about $1,400 per ounce from $1,600.
Gold prices plunged 28% in 2013, its biggest decline in 32 years, as money managers in the US and Europe dumped gold and bought other assets, such as shares, which were expected to yield more returns in line with the economic recovery in the regions.
Chinese middle-aged bargain-hunting women, known as "dama", were in a shopping spree due to the lower prices. Purchases by "dama" contributed significantly to the consumption growth in 2013.
In addition, the country relaxed its investment restrictions, allowing more purchases of the precious metal.
China's central bank earlier said it would keep the country's gold reserve at 1,054 tonnes, flat for the fifth straight year.