China's H1 gold consumption surges
Hong Kong supplies much of mainland China's gold 

Gold sales in China surged in the first six months of 2013 and the leading producer of the metal is likely to surpass India as the world's top consumer this year.

China consumed 706.36 tonnes of gold in the first half of 2013, up 54% from a year ago, the China Gold Association (CGA) said. The world's second largest economy consumed about 460 tonnes of gold in the first half of 2012; and 832.18 tonnes over the entire year.

Shoppers across China loosened their purse strings when the prices of gold fell. Gold prices have lost about a fifth of their value this year.

The CGA added that output in China touched 192.82 tonnes in the first six months, up 9% from a year ago.

"China bought a lot when prices fell below $1,350 in April, thinking it would not fall further," said Chen Min, precious metals analyst at Jinrui Futures in Shenzhen.

Chinese consumers bought much more than usual in April and May.

May gold imports from Hong Kong, a key supplier, jumped more than a third from the previous month as lower prices lured buyers.

China's gold demand could hit a record 1,000 tonnes in 2013 and could overtake India, the World Gold Council forecast. India's consumption is expected to be lower than last year's 860 tonnes while the government fought to reduce the country's trade deficit.

Gold continues to be the preferred safe-haven investment option for middle-class Chinese and Indian households, and is an essential part of festivals, weddings and gift-giving in both countries.

Beijing does not release data on gold imports or domestic consumption. Market participants have to rely on import numbers from Hong Kong and on data from trade groups such as the CGA to determine demand.