The World Gold Council has released its third quarter report recording a 6 per cent increase in demand for gold globally.

Surprisingly, the report shows that the demand for gold fell in India, which is a leading consumption destination and a rise in Europe that is facing a economic slowdown. The report shows that the rise of 6 per cent was mainly due to an increased demand from investors looking to park their funds in safe heavens in the wake of the global economic uncertainties, according to a new report by the World Gold Council.

The demand for gold in the quarter rose to 1,053.9 metric tons compared to 991.1 tons in the same period of 2010, said World Gold Council in its latest Gold Demand Trends report. The investment demand rose in the third quarter to 468.1 tons, or $25.6 billion.

The gold exchange-traded funds demand also increased in the quarter with gold ETFs and other products recording an inflow of 77.6 tons compared to 49.1 tons in the third quarter of 2010. The demand for gold bars and coins increased 29% on the year to 390.5 tons.

On the other hand, the global demand for gold jewelry fell 10% from the year earlier period as increasing prices put of customers. Eh demand from the technology sector for use in electronics for example, was flat on the year at 120.2 tons, the WGC said.

Marcus Grubb, WGC managing director of investment said, "Unsurprisingly investment demand for gold was a key driver during the third quarter. Increasing levels of inflation, the U. S. credit rating downgrade, a worsening euro- zone sovereign debt crisis and the lackluster performance of many assets drove investors to increase holdings in gold in order to protect their wealth."