CHINA’S gold demand may rise if the country’s stock market reverses its rally, according to the World Gold Council.

    Demand in the world’s largest user may rise as high as 1,000 metric tons, a nearly 3 percent increase from last year, Roland Wang, China director of the London-based group, told reporters in Shanghai yesterday.

    Gold consumption in China sank in the first quarter of this year as investors flocked to the stock market’s gain while bullion prices stalled.

    “We will be more confident to say China’s demand in 2015 will beat 2014 if we see an end of the stock market rally and a start of a gold price surge,” Wang said. “Chinese investors usually seek asset tools to prevent risks in the stock market and chase rallies in gold.”

    Rising demand in China may help support prices that have fallen for three quarters. Global investors have lost their appetite for bullion amid prospects for rising U.S. interest rates, which may subdue prices and curb gold’s allure.

    Gold of 99.99 percent purity was at 235 yuan a gram (US$1,177 an ounce) on the Shanghai Gold Exchange yesterday, down 2.3 percent this year as China’s world-beating stock market and slowing economic growth hurt demand from consumers and investors.

    Bullion for immediate delivery fell 0.1 percent to US$1,177.48 an ounce in afternoon trading in London yesterday, according to Bloomberg generic pricing.

    The value of Chinese shares has begun to pull back after jumping by US$6.8 trillion in the last year, fueled by record margin debt and novice investors.

    The Shanghai Composite Index plunged more than 13 percent last week, the fastest pace among global equity gauges and the most since 2008, amid concern valuations were unsustainable. About US$1.3 trillion was wiped off equities last week. (SD-Agencies)