"Since ancient times, gold in China has been associated with good luck and is considered to be the color of emperors. It is a tradition to give gold as a gift after a child is born, on birthdays and during the Chinese New Year. It is also an integral part of wedding jewelry," Sun says.

Jewelry still dominates the Chinese gold market, accounting for almost 64 percent of all gold demand last year. Chinese gold jewelry demand also more than doubled in the last seven years, from 224.1 tons in 2004 to 451.8 tons last year, WGC figures show.

Global jewelry demand in Q2 was 442.5 tons, 6 percent higher from a year earlier. China, India and Turkey together accounted for 59 percent of global jewelry demand at 260.1 tons in Q2 and recorded a combined growth of 36.1 tons year-on-year.

"This year, around 6.6 million brides will receive gold as part of their rituals. As a result, over 75 percent of all urban Chinese women now own more than one piece of gold jewelry. Two-thirds of Chinese women regard gold jewelry to be as much an investment as a statement of personal style, and consumers are keenly aware of the value of what they own," the WGC says.

Beijinger Yang Aiping, 52, was one of the many Chinese shoppers who turned to the offerings at the Caibai store for a gold necklace and bracelet set for her future daughter-in-law.

"It would be better if she can wear them in her daily life, but I wouldn't mind if she doesn't," Yang says. "Young people can regard gold jewelry as old-fashioned. But they can also keep them and pass them on to their children as heirlooms. I believe gold is the last thing to depreciate."

"Increasing prosperity among Chinese consumers, supported by very strong growth in the domestic economy, is still a driving force behind gold jewelry demand," the council says.

"However, the investment motive also remains a key influence, fueled by the persistent high inflation that has kept real interest rates negative for some time. The predominance of 24 carat gold in this market partly reflects this investment motive, given its higher purity, as well as reflecting the demand for jewelry with better product design and quality."

The surge in Chinese gold purchases is rooted in culture, as gold in China is associated with good luck and is considered to be 'the color of emperors'. Provided to China Daily

The WGC also points to buoyant gold demand in the country's technology sector, where the highly conductive metal can used for gold-plated contacts, connectors and wiring in items ranging from computers to cell phones.

Global technology demand for the precious metal was up by 2 percent at 117.9 tons from 116.1 tons in the second quarter of 2010, generated by an increase in demand from the electronics sector, the council reports. That meant a quarterly record of $5.7 billion, up 28 percent from the next highest in the last quarter of 2010 at $4.5 billion.

"The electronics industry will continue to see demand for tablets, smartphones, and e-readers accelerating, as well as increased demand for industrial processors that enable devices to harness renewable energy, such as solar panels. In addition, the industry has also seen strong demand for electronic components across all ranges of vehicle production," the WGC says.