China set to take world’s biggest gold market title from India

China is set to become the world's biggest gold market this year, according to a new industry report.

Demand for gold in China jumped 20 percent in 2011 to 769.8 metric tons, the World Gold Council said. Meanwhile, gold consumption in India dropped by 7 percentto 933.4 metric tons. “It is likely that China will emerge as the largest gold market in the world for the first time in 2012,” Marcus Grubb, the council's managing director of investment, told Bloomberg News.

Rising incomes have been driving sales of gold in China, the Associated Press said. In India, meanwhile, a weakening rupee has made the metal far more expensive as high inflation has been crushing consumers' purchasing power.

“Gold will be attractive as a luxury good, and certainly China has made it clear that it likes luxury goods,” Jeremy Friesen, Hong Kong-based commodity strategist at Societe Generale SA told Bloomberg. “There’s a lot of pent-up demand.”

Combined, China and India remain the "cultural heartlands of gold," the World Gold Council said. Together the emerging market giants are responsible for 55 percent of global jewelry demand and 49 percent of global gold demand.