The global demand for gold will remain high for the rest of the year, the World Gold Council said Thursday.

Strong worldwide demand for the yellow will continue through 2011 for three reason, the council said in its Gold Demand Trends report.

    Despite a higher gold price, Indian and Chinese demand grew 38 percent and 25 percent respectively during the second quarter of this year compared to the same period of 2010. This growth is likely to continue, due to increasing levels of economic prosperity, high levels of inflation and forthcoming key gold purchasing festivals.

      The impact of the European sovereign debt crisis, the downgrading of US debt, inflationary pressures and the still-fragile outlook for economic growth in the West are all likely to drive high levels of investment demand for the foreseeable future.

      Central banks are likely to remain net purchasers of gold. Purchases of 69.4t during Q2 2011 demonstrated that central banks are continuing to turn to gold to diversify their reserves.

        The council also said that gold's strong start to the year was reinforced during the second quarter of 2011 where total global gold demand measured 919.8 metric tons, worth a near-record $44.5 billion, with broad-based support across all sectors and geographies. Standout markets were India and China, as these two markets accounted for 52 percent of total bar and coin investment and 55 percent of global jewellery demand.