China is set to overtake India to become the world’s top gold consumer this year, as the driving forces in the market shift from West to East..

“Most likely this year we will see China overtake India slightly,” Albert Cheng, the World Gold Council’s managing director for the Far East told AFP in an interview on the sidelines of a conference in Rome.

“A 1,000-ton market will probably be achieved” for China, he said, out of a global yearly market of around 4,400 tons made up of 2,800 tons from mine production and 1,600 tons of already existing gold.

Cheng said the sharp rise in consumption was helped by fast-paced economic growth and a lack of government restrictions on the market, making gold easily accessible for ordinary Chinese.

He said there were now an estimated 100,000 gold jewelry stores in China and 20 banks selling gold ingots or gold-linked investment accounts.

“India and China are twin engines for the market. They account for 60 percent of global consumption,” he said, adding that India’s consumption has been going down for two years.

Rupee depreciation and high customs duties on gold imports were two major reasons and attempts to get Indians to trade the estimated 20,000 tons of gold in private hands have had little effect, he said.

Speaking on the sidelines of the conference organised by the London Bullion Market Association, Marcus Grubb, the Council’s managing director for investment, said demand in China and India would continue to sustain gold prices for the foreseeable future.

“There are 2.5 billion people who are going to get richer. There’s going to be a higher population, they’re going to buy more gold,” he said.

The London-based World Gold Council is the main market development organisation for the industry and includes all the top gold mining companies.

Gold prices spiked during the global financial meltdown and Europe’s debt crisis because gold is seen as a safe haven in troubled times.

But, mainly due to better economic forecasts, they have fallen by up to 20 percent this year and the price is now around $1,340 (989 euros) an ounce.

Grubb said lower gold prices and bets in the market that prices will fall even further made it profitable to sell in the short-run “especially if someone in China is paying a premium”.

“The gold has moved from West to East this year as this change in dynamic in the market has happened. It’s being re-refined through Switzerland and sent to China in kilo-bars,” Grubb said.

Grubb said he remained bullish about the prospects for the gold market, pointing out that lower prices had triggered an increase in consumption from private buyers to record levels.

“There are traders who clearly think that gold will go lower, actually the consumer all around the world disagrees,” he said, adding that the US Federal Reserve’s reluctance to reduce stimulus could also see “Western demand improving again”.

Even if stimulus is cut in the United States, he said there was unlikely to be a major effect on prices since this is “already largely discounted”.

“If you’re an investor looking at your portfolio, there’s a lot of risk out there, so you need a hedge asset like gold,” he said.