Gold prices will reach US$2,000 an ounce before the year is out as China's sparkling demand for jewelry helps to send the cost of the precious metal ever higher, a new report suggests.

The surging cost of gold did not deter China from producing a record 496 tons of jewelry last year, up an annual 15 percent and double the amount made five years ago, according to the quarterly Thomson Reuters GFMS Gold Price Survey.

Most markets have seen a severe downturn in jewelry production on the soaring cost of gold, which rose 23 percent last year, and broader economic uncertainty hurting consumers' enthusiasm for jewelry.

Excluding China, Asia's jewelry output dimmed 11 percent last year, while worldwide it fell by 2 percent, a smaller drop, the report said yesterday.

Philip Klapwijk, global head of metals analytics at Thomson Reuters, said: "Gold was clearly dependent on emerging markets' economic strength as China's jewelry demand grew to a record level while India's fell by less than 3 percent."

Renewed concerns over the eurozone economy may also boost the price up to US$2,000 by the end of this year despite a dip in the first half of the year, the report said.

While gold has eased to slightly above US$1,600 on the back of stronger economic data from the US, "acute fears" over the economic stability of Spain would see investors buying the metal, the authors suggested.

A gold analyst at RBC Capital Markets in London said: "The key factors that support a rise in gold prices are the eurozone sovereign debt crisis, purchases by central banks and strong physical demand in China." The analyst predicted the gold price at the end of 2012 at US$1,700 an ounce.

Investors contributed to China's record imports of gold bullion, which more than doubled last year to 515 tons.