Confirming what most will have felt intuitively, new figures say that global demand for gold rose to an all-time high in 2011 off the back of record investment demand.

At an estimated 4,067.1 metric tons worth $205.5 billion, demand exceeded $200 billion for the first time ever, with this figure also representing the highest tonnage level since 1997, according to the World Gold Council.

The WGC said that the investment sector was the driver of this level of unprecedented demand, accounting for 1,640.7 tons ($82.9 billion worth) of the gold, up 5 per cent on the previous record of 2010.

India, China and Europe were the markets hankering most for the precious metal, with the first two “cultural heartlands of gold” accounting for 55 per cent of global jewelry demand and 49 per cent of overall demand, the WGC said.

India’s demand amounted to 933.4 tons, which the organization said was “notable considering the volatility of the gold price and the weakness of the Indian rupee against the US dollar during the second half of the year.” Of this demand, jewelry represented over 500 tons and the investment market 366 tons, and India also accounted for a quarter of the world’s total bar and coin demand.

China, meanwhile, exhibited a 20 per cent year-on-year uptick in demand, with the largest rise being from the investment sector which showed a 69 per cent leap to 258.9 tonnes, representing a value of RMB84.5 billion. Perhaps unsurprisingly considering China’s rapidly rising middle class, China’s jewelry demand increased every quarter of last year and the country was the largest single jewelry market worldwide for the second half of 2011.

Turning to Europe, the continent’s demand showed its seventh consecutive annual gain, ending at 374.8 for 2010. This increase was of course amid the eurozone crisis, and Germany and Switzerland were the biggest drivers of growth.

Looking at central banks, they remained net buyers of gold, continuing 2010’s trend but with far higher levels of demand. In 2011 central banks bought 439.7 of the yellow metal, up from 77 tons in 2010 - a remarkable rise reflecting the need to diversify assets, reduce reliance on one or two foreign currencies, rebalance reserves and ultimately protect national wealth, the WGC said.

“What we can see from these 2011 figures is that there were two main factors driving the results: Asian growth and optimism on the one hand and Western desire to protect assets against uncertainty on the other,” said Marcus Grubb, managing director, investment at the WGC.

“Looking particularly at Asia, there was a major boost to the overall figures from the increase in Chinese demand, which is a trend that we see continuing over the next year. It is likely that China will emerge as the largest gold market in the world for the first time in 2012. What is certain is that the long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity.”