Demand from global investors reached 230 tonnes during the three months to the end of September, up from 181 tonnes a year earlier, new data shows.

Gold demand rose 8 per cent year-on-year to 1,121 tonnes in the third quarter as investors rallied around the precious metal and consumers took advantage of lower prices, according to the World Gold Council.

Global investment demand grew 27 per cent to 230 tonnes over the period, largely thanks to a 207 per cent surge in bar and coin demand in the US. China saw a 70 per cent increase in demand while European demand was up 35 per cent.

“Purchases by the central banks almost equalled the Q3 2014 record as gold’s diversification benefits continue to be recognised. The increased transparency that comes from the publication of China’s reserve data is a welcome addition to the market – although Russia still remains the most significant buyer,” said Alistair Hewitt, head of market intelligence at the World Gold Council.

Meanwhile, global demand for jewellery was up 6 per cent year-on-year at 632 tonnes. With the wedding season approaching in India, demand in the country grew 15 per cent to 211 tonnes while China logged a 4 per cent jump to 188 tonnes.

“China and India remain the dominant figures in the global gold market, accounting for close to 45 per cent of total demand,” said Hewitt. “There were significant gains in bar and coin demand in China and across Europe, but it was in the US where we saw the most dramatic growth, with US Mint Eagle sales reaching their highest level since Q2 2010."

"Gold prices tend to lead household demand worldwide, not vice versa. Hence the jump in China and India's buying on the summer's new five-year lows, but now also in Western investment demand, most notably from private investors in the US,” said Adrian Ash, head of research at Bullion Vault, the online market for physical precious metals.

"Such bargain-hunting will eat itself before pushing prices higher. For that, gold needs large inflows from money managers, the kind we saw during the financial crisis – and the kind of panicked dash for gold which 2015's private investment demand continues to anticipate from the next meltdown in financial markets," Ash said.