Gold set to regain luster again as investors rush to hedge losses

Gold demand in China fell by 3 percent in the second quarter of the year to 216 metric tons on the back of slowing economic growth and lower offtake, the World Gold Council said on Thursday.

In its quarterly outlook for the precious metal, the WGC said the prognosis for the next six months looks better as demand is increasing, and more investors are keen on diversifying their investment options amid fluctuating stock markets and a weaker currency. According to the council, China's demand for gold jewelry dropped by 5 percent from a year ago to 174 metric tons at the end of the second quarter.

"Demand for gold, both jewelry and investment items such as coins and bars, has been recovering in China, as price-sensitive consumers are cashing in on the price drops and diversifying their risks by using gold as a hedge against risks from other sectors," said Roland Wang, managing director of WGC's China operation.