China may overtake India as the world's biggest gold consumer in 2013 as the dragon country has more favourable policy on the precious metal as compared to the economy, the WGC said on Thursday.
Gold consumption in China rose to 570 tonnes in the first half of the current calendar year, slightly higher than 566.5 tonnes in India, the data showed.
Consumers in these two countries expect gold prices to be stable or higher in the future, it said.
Asked if China could surpass India in gold consumption in 2013, World Gold Council (WGC) India Managing Director Somasundaram PR said: "There is a possibility. China's policy has been pro-gold in the last few years. So, the trajectory of growth is much higher there."
On the other hand, Indian policies have been to reduce gold demand by restricting supplies through imports in an attempt to address the current account deficit (CAD), he said.
The WGC suggested that India needs to adopt a long-term policy on gold, and said measures such as import duty hike to 10 per cent and linking all forms of gold imports to mandatory exports are unlikely to bring down the burgoening CAD.
Stating that both countries have strong retail consumers, Somasundaram said, "Gold demand in India and China is expected between 900 and 1,000 tonnes (in each nation) in 2013 calendar year."
Gold consumption stood at 864 tonnes in India, while it was 832 tonnes in China during 2012.
Being the world's largest producer of gold, China's half of the gold demand is met through domestic supplies, while India depends almost entirely on imports for the yellow metal, he said.
The two countries account for more than 60 per cent of world jewellery market and about half of total bar and coin demand, he added.
According to the latest WGC report, the gold consumption in China during the April-June period of this year confirms that the gold investment demand in China remains strong.
The poorly performing stock market in that country is not an attractive alternative investment and gold investment products are increasingly available and easily accessible to a captive domestic audience, it said.
In China, continued expansion of