Chinese gold imports from Hong Kong, a proxy for the country's overall overseas buying, leaped to a record high in September, when monthly purchases matched almost half that for the whole of 2010. Gold is a major commodity of Mongolia that took new focus from miners after its recent surge in value this past summer.

The buying spree follows a sharp drop in the price of the precious metal. After hitting a nominal all-time high of USD 1,920.30 a troy ounce in September, gold fell to a three-month low of USD 1,534 an ounce later in the month. Chinese investors snapped up the metal as prices fell.

“In September we saw some bargain hunters come back into the market on the price dip,” said Janet Kong, managing director of research for CICC, the Chinese investment bank.

China is the world's second largest gold consumer and demand has grown rapidly over the past year as Chinese investors buy gold to hedge against inflation and consumers buy more gold jewelry.

Data from the Hong Kong government showed that China imported a record 56.9 tons in September, a six fold increase from 2010. Monthly gold imports for more of 2010 and this year run at about 10 tons, but buying jumped in July, August, and September. In the three-month period, China imported from Hong Kong about 140 tons, more than roughly 120 tons for the whole 2010.

The last two months of this year are likely to see China's gold imports surge further ahead of Chinese New Year, supporting gold prices,” said Kong. Investment demand for gold in China has been particularly strong this year as a hedge against inflation. Chinese bank deposits offer negative real interest rates, and other outlets for investment have been limited as Beijing has curbed property sales and the stock market has performed poorly. Rising incomes and a tradition of giving gold has also buoyed China's gold demand.