China topped India as the world's top consumer of gold in the first quarter of this year, cementing expectations that China will be the dominant buying force in the gold market in 2012, the World Gold Council said Thursday.
Indian gold demand dropped 19% on the year in the first three months of the year, to 207.6 metric tons. The domestic gold sector was rattled by strikes following the announcement of new taxes on the gold trade and weakness in the Indian rupee made dollar-denominated gold more expensive for Indian buyers.
In contrast Chinese gold demand rose 7% in the same period, to 255.2 tons, according to the WGC.
Between them, China and India accounted for 54% of global gold demand in the first quarter.
Although Chinese demand growth is starting to moderate and Indian gold demand is expected to pick up this quarter as the market adjusts to the new legislation and tax structure, China should remain the world's top gold consumer for the balance of the year, said the WGC.
"We still expect China to exceed India this year in overall gold demand," Marcus Grubb, WGC managing director of investment, told Dow Jones Newswires in an interview.
-By Francesca Freeman, Dow Jones Newswires; +44 (0)20 7842 9412; email@example.com