China may overtake India as biggest gold market: report

China may overtake India as biggest gold market: report

London: China, the world’s largest producer of bullion, is set to overtake India as the biggest physical gold market this year as mine production increases and investment demand grows, according to research company GFMS Ltd.

GFMS measures market size on mine production, fabrication and bar hoarding, executive chairman Philip Klapwijk said in a report on Thursday. China’s mine production will reach a record in 2008 and the country will produce more than 300 metric tonnes of jewellery, he said, without giving comparable figures for India.

Demand for gold as a hedge and as a speculative instrument has grown in the wake of the bursting of local property and stock market bubbles, Klapwijk said.

Chinese gold demand may be 360 tonnes compared with a record 362 tonnes last year, the China Gold Association said this month. Production may rise 2% to 276 tonnes.

Meanwhile, India’s gold extended losses on Friday on global leads, while domestic buyers stayed away from fresh purchases awaiting lower prices, traders said.

“There is not much demand on the physical side," said a dealer with a state-run bank in Mumbai. The benchmark February gold contract shed 1.8% on Thursday’s trade.

Dealers said a weaker rupee kept the downside limited in the yellow metal, further adding to demand woes.

“One day’s fall does not make any difference to retail buyers," said Kailash Mosun, a partner at Jaipur-based JKJ Jewellers.

Most traders are waiting gold to fall to Rs12,000 per 10g to make further purchases.

Reuters contributed to this story.