With the stock market fluctuating and the property sector subdued, the gold market had a chance to shine.

In 2010, prices of gold futures at the Shanghai Gold Exchange (SGE) climbed around 23.7 percent on buoyant demand. The total volume of gold traded on the SGE totaled 6,046 tons last year, soaring 28.48 percent from 2009.

As inflation jitters proliferate in the country, risk-weary investors continued to appreciate the enduring value of gold, despite its surging prices. Meanwhile, economic growth in the country might decelerate, which should have a subsequent positive effect on gold, said Zhang Yingying, a senior analyst at the China Galaxy Securities Co. Ltd.

Besides this, the increased investment activity was also in part driven by new investment vehicles offering improved access to gold trading, she said.

In August 2010, the Chinese Government announced a relaxation of the rules on gold derivatives trading and pledged to allow more commercial banks to undertake imports and exports of the precious metal.

Since 2007 China has been the world's largest gold producer. Gold output climbed 8.57 percent year on year to reach 341 tons in 2010, according to the China Gold Association. It is also the world's second largest gold consumer, with buoyant demands from all factors, including jewelry sales, private investment, as well as industries and the central bank.

The World Gold Council even predicted that China's gold market will double within the next decade as retail investment and jewelry demand booms.

The council estimated China's per-capita ownership of gold coins and bars was only 0.26g, compared with more than 100g in developed countries, which means there is ample room for growth.