Demand for gold inched up one percent last year as jewelry sales slowed due to rising prices.

Gold demand was 294.5 tons last year in China, including Hong Kong and Taiwan, the World Gold Council said late yesterday. The figure also includes investment in jewelry and bullion.

Gold investment gained 29 percent last year to 19.1 tons while jewelry demand dropped one percent to 275.4 tons, the council said.

Big fluctuations

On the mainland, gold jewelry and investment demand both gained while the figures in Hong Kong and Taiwan dipped.

Mainland gold demand gained 2.6 percent to 259.6 tons in 2006.

Gold prices surged to more than US$720 in the second quarter of last year and experienced wide fluctuations in the third quarter, dampening gold jewelry sales.

Gold prices rising at a steady pace will help boost demand, industry watchers said.

In the fourth quarter, gold jewelry demand gained three percent from a year ago to 73.9 tons. The year-end is also the peak season for gold jewelry sales.

K-gold, or 18-carat gold, accounted for 18 percent of last year's total gold jewelry sales, up from 15 percent a year ago.

Gold sales will rise further in China due to a traditional attachment to the yellow metal, Wang Lixin, China manager of the World Gold Council said.

China's mainland, the world's third-biggest gold miner, produced 240.1 tons of gold last year, up 16 tons, or 7.15 percent more, than in 2005, said the China Gold Association.

The mainland deregulated its gold market in late 2002, when the Shanghai Gold Exchange opened, allowing gold producers, corporate users and banks to trade the yellow metal.