Chinese gold imports hit a fresh record high in October and accounted for more than one-quarter of global demand. It is the fourth consecutive month that China�s gold have hit new highs. Data from the Hong Kong government showed that China imported 85.7 tonnes of gold via Hong Kong in October, up 50 per cent from the previous month and up more than 40 times from October last year.

China�s demand for gold has been surging this year as Chinese buy more gold jewellery and gold bars. Gold bars are popular investments as a hedge against inflation, and because the Chinese face limited options for other investments given China�s negative real interest rates on bank deposits and wobbling property prices.

In September, gold on the Shanghai Gold Exchange briefly traded $50 an ounce higher than the main global market based in London, a record price difference that encouraged imports.

However, analysts said that buying from China and other emerging economies had fallen sharply since October, as the weakness of their currencies against the dollar had made gold more expensive. The difference between London and Shanghai gold prices has fallen to almost zero.

The price of gold on Monday fell 2.7 per cent to $1,664.19 a troy ounce amid concerns about a tailing off of emerging market consumption, together with a downbeat market assessment of the outcome of last week�s European leaders� summit.

China�s key gold-buying period is around Chinese New Year, which falls at the end of January, and China�s gold shops are already filled with dragon-emblazoned gold bars, coins, and figurines to give as gifts for the year of the dragon. Beijing has also encouraged the use of gold as an investment tool for Chinese savers given the limited investment options and China�s closed capital account.

China is the world�s second-biggest consumer of gold, after India, but is expected to take the top spot soon. This year China�s imports via Hong Kong during the first 10 months of the year are more than three times higher than the same period last year.

Beijing does not publicly disclose its gold imports, but analysts consider the Hong Kong import figures a good directional proxy for the country�s total gold overseas buying.