Record demand for gold bars and coins was countered by sizable net outflows from ETFs. The technology sector saw marginal growth, with the 1 percent year-on-year increase the first in two years, the report said.

"In China demand for gold remains robust with both physical and investment financial products among the most popular investment channels," said Xue Ke, chief analyst and deputy general manager at Tianjin Jinhengfeng Precious Metals Management Co.

Central bank demand slowed in the second quarter of the year from the second quarter last year.

Total gold supply shrank 6 percent from the second quarter of 2012, almost solely because of the reduction in recycling.

Recent robust demand for physical gold has pushed up the spot price of gold, the latest data showed. The most recent spot gold prices rallied to the highest since July 24 on Thursday to $1,346.61 an ounce, despite a US filing that showed billionaire John Paulson had reduced his holding in the SPDR Gold Trust by 53 percent in the second quarter of the year. Bullion prices increased 1.1 percent on Wednesday.

A World Gold Council survey that polled 1,000 Chinese people in July showed 66 percent of respondents believe the average price of gold will increase over the next five years, which reflects the strength of the demand response, the council said.