As rising incomes help boost the demand of the safe-haven precious yellow metal gold in China, it is quite probable that the world's second-largest economy, also the world's largest gold producer, will topple long recognised India as the world's largest gold bullion market in 2012.

According to the World Gold Council (WGC), China's gold demand this year may likely rise by as much as 30 per cent, spurred by rising incomes of a populace that seem to get richer every day.

On the one hand, appetite for the yellow metal could range between 900 metric tonnes and 1,000 metric tonnes this year, compared from 769.8 metric tonnes in 2011, Bloomberg News reported, quoting Albert Cheng, Far East managing director of WGC.

India's gold demand, on the other hand, runs on the opposite and may likely fall between 800 metric tonnes and 900 metric tonnes this year, compared from 933.4 metric tonnes in 2011, Mr Cheng said.

"We are confident China will become the largest source of demand for gold this year," Mr Cheng told Bloomberg News.

He recalled an earlier forecast in 2012 that China and India, over the next five years, will slug it out in the gold demand department. This competition "may account for more than 50 per cent of world demand."

China's continued and growing demand for gold will also help steady the prices of the metal in the world market. Prices have dropped to the $1,500 an ounce range as investors grew wary of the economic complications in Greece.

Demand for gold worldwide plummeted 4.6 per cent to 1,097.6 metric tonnes in the first quarter, WGC said in a report.