The global outlook for gold demand remains robust throughout 2011 against the background of another strong quarter, geographic and sectoral diversity of demand, and strong fundamentals, the World Gold Council (WGC) said.

In a report about gold demand trends in the first quarter this year issued on its website, the WGC said factors such as continued uncertainty over the U.S. economy and the dollar, ongoing European sovereign debt concerns, global inflationary pressures and tensions in the Middle East and North Africa will continue to drive investment demand for gold, Xinhua news agency has reported.

The WGC predicts that sustained momentum in the demand for Chinese and Indian jewelry will also support growth in the jewelry sector throughout 2011.

The WGC expects net purchasing by central banks to continue in 2011 as central banks turn to gold as a means of diversifying reserves.

According to the WGC's data, global gold demand in the first quarter of 2011 totalled 981.3 tonnes, up 11 percent year-on-year. In value terms, this translates to 43.7 billion U.S. dollars, compared to 31.4 billion U.S. dollars in the first quarter of 2010, an increase of almost 40 percent.

From January to March, the quarterly average gold price hit a new record of 1,386.27 U.S. dollars an ounce, as investment demand grew by 26 percent year-on-year to 310.5 tonnes.

During the first quarter, the gold supply declined by 4 percent year-on-year to 872.2 tonnes due to a sharp increase in net purchasing by central banks and a fall in the supply of recycled gold, down 6 percent from a year earlier to 347.5 tonnes.

Mine production increased by 44 tonnes year-on-year, or 7 percent, with negligible net producer de-hedging.

Central bank purchases jumped to 129 tonnes in the quarter, exceeding the combined total net purchases during the first three quarters of 2010, according to WGC.