China’s gold consumption slipped in the third quarter as the country’s painful economic slowdown hurt consumer sentiment, according to World Gold Council data released Thursday. Meanwhile, gold demand in India rebounded.

China's economy slowed for a seventh consecutive quarter in the period from July to September, but October economic data published this month offer the strongest sign so far of a recovery that’s gathering steam.

The fourth quarter is likely to witness a recovery in Chinese demand as the market expects new economic stimulus from the new political leadership and as the holiday gifting season approaches.

“If China puts in a good fourth quarter, it could still become the largest gold market in the world [for the first time on an annual basis], bigger than India,” said Marcus Grubb, managing director for investment at the WGC. “But we think it’s going to be closer than we thought it would be in February, simply because of this weakness in Q3.”

Chinese gold consumption fell 8 percent in the third quarter to 176.8 metric tons, the industry body said in its latest Gold Demand Trends report. Demand in the jewelry sector was down 5 percent from a year ago, while bar and coin investment demand was 12 percent lower. Nevertheless, consumer demand as a whole was 23 percent above its five-year quarterly average, confirming the longer-term strength of the market.

Meanwhile, Indian demand rose in the last quarter by 9 percent to 223.1 metric tons, reversing the trend of the previous three quarters.

“Everywhere, we are starting to see the Indian market come back as the strengthening of the rupee against the dollar makes gold more affordable again for Indian consumers,” Grubb said.

India’s demand is seasonally driven, as well.

Although lower monsoon rainfall during August curtailed demand, a recovery in rainfall during September boosted sentiment and prompted a further wave of relief-related demand, the WGC said. The fourth-quarter festival season also featured as a driver of demand, with stocks being increased and preparatory purchases made toward the end of the quarter.

However, the growth in third-quarter demand was not sufficient to overcome the weakness experienced in India during the first half of the year, the WGC said.

India's consumer gold demand in the first three quarters of this year was 24 percent lower relative to the same period last year. While the prospects for the fourth quarter are positive, it is unlikely that demand will recover sufficiently to result in a gain for the year as a whole.

In the first nine months of this year, 612 metric tons of gold were bought by Indian consumers, compared with 605 metric tons purchased by Chinese consumers.

“India is still the largest buyer by a small margin,” Grubb said. “Typically, the fourth quarter is strong in China leading into the New Year. So, it’s all on Q4 to see which market will be the largest in the world for the full year.”

Related: SPDR Gold Trust (NYSEARCA: GLD), Market Vectors Gold Miners ETF (NYSEARCA: GDX), iShares Gold Trust ETF (NYSEARCA: IAU), Market Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ), Goldcorp Inc. (NYSE: GG), Barrick Gold Corp. (NYSE: ABX), Kinross Gold Corp. (NYSE: KGC), Agnico-Eagle Mines Ltd. (NYSE: AEM), IAMGold (NYSE: IAG).