LONDON (Commodity Online) : China remains world's second largest gold consumer behind India though its gold demand increased by 26 percent year-on-year in the second quarter.

According to World Gold Council (WGC), China's gold demand in the April-June period reached 111.7 tons.

In the second quarter, 48 percent of China's gold demand was from retail investment, which was 25.4 percentage points higher than a year earlier.

China outperformed all other countries in the world in terms of the growth rate in the retail investment volume for the metal, WGC said.

Total global gold demand from April to June jumped 36 percent from the previous year to stand at 1,050 tons, largely reflecting strong demand compared with the second quarter of 2009, WGC said.

China and India were the major drivers of the world gold market during that period.

China's strings of measures to curb its property market and mounting inflation concerns over the past months have caused a buying spree for bullion in China, as it is seen as a safe haven by investors.

Gold futures on the New York Mercantile Exchange have increased 12 percent so far this year, reaching an all-time high of $1,266.5 per ounce this June, as investors' enthusiasm for the metal was fueled by the faltering global economic recovery.

In the longer term, demand for gold in China is expected to grow considerably, the WGC said in the report.

Demand for gold will remain robust during 2010 as a result of accelerating demand from India and China, as well as increasing global investment demand driven by continuing uncertainty over public debt and economic recovery, the WGC said.

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