Investors bought more gold than buyers of jewellery for the first time in three decades in 2009, highlighting increasing impact of speculators on bullion prices. GFMS, the consultancy which compiles benchmark supply and demand data on the metal, yesterday said that investment demand more than doubled to 1,820 tonnes last year, while jewellery purchases fell 23 per cent to 1,687 tonnes, a 21-year low.

The data provides the clearest indication of the huge role investors played in driving gold to a record high of $1,226.10 a troy ounce in December.

Philip Klapwijk, executive chairman of GFMS, told the Financial Times he sensed that a “large amount of money” was poised to enter the gold market this year.

He predicted a “bumpy” return to record prices by the summer on the back of loose fiscal and monetary policies and US dollar weakness.

However, Mr Klapwijk also warned that although investors could buy more gold this year, the market would become “increasingly vulnerable” to a major correction when the circumstances favouring investment disappeared.

The surge in gold prices, from $250 an ounce in 1999 to last year's record, have depressed jewellery sales, traditionally the backbone of consumption.

The global economic crisis has also affected demand, particularly in India, the world's largest buyer.

On the supply side, China cemented its position as the world's biggest gold producer. A further fall in South Africa's output, down 5 per cent on the year, saw it relegated to third position behind Australia. It had been the top producer for more than a century until 2007.