Q1 demand for gold sinks like lead

China's gold demand fell 18 percent in the first quarter as investors bought fewer bars and coins, offsetting record interest in jewelry, the World Gold Council said.

Purchases declined to 263.2 metric tons in the three months ending March from a year earlier, the London-based council said in a report released on Tuesday. While jewelry consumption rose 10 percent, demand for bars and coins sank 55 percent, accounting for about 40 percent of the global decrease.

Lower demand from China, which surpassed India as the largest gold consumer last year, may weigh on the precious metal that has increased 7.4 percent this year, partly on haven demand amid tension in Ukraine. As holdings in bullion-backed exchange-traded funds contract to the least since 2009, Goldman Sachs Group Inc expects prices to extend declines after a 28 percent drop in 2013, the most in three decades.