India Remains Biggest Gold Buyer as Gap Between China Narrows

India remained last year’s biggest gold buyer, with the gap between second-largest consumer China narrowing to the smallest ever, the World Gold Council said.

Indian usage jumped 41 percent in the fourth quarter, leaving the full-year total down 12 percent at 864.2 metric tons, the London-based industry group said today in a report. China’s consumption fell 0.5 percent to 776.1 tons, lagging India by 88.1 tons. The gap was 206.5 tons in 2011.

The council said in November that China would probably overtake India as the biggest buyer on an annual basis. China’s economic growth slowed to a three-year low of 7.4 percent in the third quarter, before accelerating for the first time in two years in the three months through December. The two nations together account for about 52 percent of global consumer bullion demand, according to the council.

“China did go into a quite a sharp economic slowdown in the third quarter, and that was greater than we anticipated,” Marcus Grubb, managing director of investment research at the council, said yesterday by phone from London. “You’ve basically now got two markets that are very close together, both driving the global demand for gold. For this year, it’s going to be very close. We probably think that India will remain the larger market.”

Indian consumption may climb about 11 percent to 965 tons this year, as Chinese buying increases about 13 percent to 880 tons, Grubb said.

“China could become bigger than India if it comes in at the top of its range,” Grubb said. “On a per capita basis, Chinese demand for gold is still significantly lower than India. In the long run, that leads you on that measure to potentially favor China, because there’s a catch-up effect.”

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