BEIJING(BullionStreet): A day after a World Gold Council report said China's gold demand dropped 8 percent in the third quarter, experts are hopeful of a recovery in the fourth quarter.

According to Albert Cheng, WGC managing director in charge of the Far East region, Chinese demand will recover in the fourth quarter, as the new leadership in the country is expected to roll out stimulus measures, and as the holiday gift-giving seasons approach.

He said despite the dip, consumer demand as a whole stayed 23 percent above the five-year quarterly average, confirming the long-term strength of the world's second-biggest gold market.

Shanghai Gold and Jewelry Trade Association said they expect a surge in jewelry demand during the rest of this year and start of next, as the Christmas and New Year holidays approach.

Association sees changes in Chinese buying habits, as consumers tend to buy gold jewelry in batches, as an investment. Investment managers said they had seen more demand for gold bars and commemorative coins, than for gold-backed exchange-traded products.

Chinese investors' preference to buy into rising prices also contributed to the drop in investment demand, as the gold price weakened in July and August, and added that it expected demand to pick up as the markets strengthen.

Shanghai Gold Exchange is expected to launch over-the-counter gold exchange-traded funds this week.An interbank market will also be opened that it will start with spot contracts and gradually offer forward contracts.

The World Gold Council said in a report on Thursday that demand for the metal in China dropped 8 percent, to 176.8 metric tons during the period.

The demand drop was part of a broader decline in global gold demand, which declined 11 percent to 1,084.6 tons from 1,223.5 tons in the same period last year.

Global supply also dipped 2 percent to 1,188.3 tons. The council's figures show that Chinese demand for jewelry dropped 6 percent as consumers delayed purchase plans, hoping for a price decline.

For the same reason, sales of bars and coins for investment purposes in the third quarter dropped 12 percent from a year earlier.

The sale of 18-carat gold slid the most in the third quarter, largely because of softening consumer demand for jewelry items. The slowdown also hurt the sale of gold bars and coins, investment analysts said.