Demand for gold from China will double within the next decade, according to a report from the World Gold Council.

Chinese gold consumption was worth more than $14bn in 2009 Photo: EPA

China's demand for gold in areas such as jewellery lags behind other countries, while its central bank holds less gold than other states as a percentage of total reserves, the WGC said.

The report also predicted that China's gold mines would not keep pace with demand and could even be exhausted within six years.

Marcus Grubb, managing director of investment at the WGC, said: "If gold demand in China continues to accelerate and becomes more comparable with other major markets, we expect it to double in tonnage terms within the next decade." Chinese gold consumption was worth more than $14bn in 2009.

The WGC said Chinese "consumption intensity" lagged substantially behind other major markets and that, while China was the world's sixth largest official holder of gold, its gold reserves currently accounted for less than 2pc of total reserves, which was "low" by international standards.

Mr Grubb said: "Our analysis confirms that significant untapped growth potential exists in the Chinese gold market."

During the past decade, Chinese gold mining producers have stepped up production by 84pc, the WGC said. Eily Ong, investment research manager at the WGC and author of the report, said: "If gold demand were to continue to increase so markedly, domestic supply would be unable to keep pace.

"Whatever the outcome, China's outlook will almost certainly have implications for the global gold market."