Gold demand slid to eight-year low in 2017 -WGC

* Gold demand fell 7 pct to 4,071.7 T in 2017

* Investment slid 23 pct as ETF buying declined

* Jewellery buying rose for first year since 2013

By Jan Harvey

LONDON, Feb 6 (Reuters) - A late rally in physical gold

buying failed to prevent a drop in full-year demand last year to

its lowest since 2009, the World Gold Council said on Tuesday,

as weaker fund investment outstripped a bump in jewellery

consumption.

Global gold demand slid 7 percent in 2017 to 4,071.7 tonnes,

an eight-year low, the WGC said in it latest quarterly demand

trends report.

Investment demand fell by nearly a quarter, driven by

reduced inflows into bullion-backed exchange traded funds, the

gold mining industry-funded WGC said. While gold prices rose

last year on the back of dollar weakness, rising interest rates

and a surge in stock markets detracted from the metal's appeal

as an investment.

"Certainly the higher equities and rising interest rates

will have prompted some investors to think about their

allocation to gold (last year)," the WGC's head of market

intelligence Alistair Hewitt said. "That said, lots of investors

are concerned about frothy asset prices."

With (Other OTC: WWTH - news) monetary policy still loose in Europe, 73 percent of

new gold ETF investment last year flowed into European funds, he

said. "In Europe, you still had negative interest rates and

negative yields," he said. "You can contrast that with the

United States, where you had three rate hikes."

Optimism over global growth, which helped drive the rise in

equities last year, also fed into stronger jewellery

consumption, he said. Jewellery demand saw its first annual rise

since 2013 despite a 13 percent increase in gold prices.

Indian jewellery demand, which saw particular weakness in

2016, rose 12 percent, posting its strongest fourth quarter

since the WGC started compiling data in 2000. In China,

jewellery demand rose 3 percent last year, its first annual

increase since 2013.

Total Chinese buying stood at 953.3 tonnes last year, while

Indian demand reached 726.9 tonnes, the WGC said. It expects to

see buying at similar levels this year, with Indian demand seen

at 700-800 tonnes, and Chinese offtake at 900-1,000 tonnes.

Central banks also trimmed their overall purchases for a

fourth straight year. A drop in demand in the fourth quarter was

due entirely to Venezuela's $1.7 billion swap deal with Deutsche

Bank elapsing in October, the WGC said.

This represents 45 tonnes of gold, it said, and was

accounted for in the fourth-quarter figures as a sale.

Demand from Russia and Kazakhstan stayed buoyant, while the

market also saw a rise in demand from Turkey. China, a strong

official sector buyer in recent years, was absent from the

market in 2017.

This year central bank demand is expected to hold at 300-400

tonnes, little changed from 2017 levels, Hewitt said.

WORLD GOLD DEMAND (T)*

2017 2016 Pct change

Jewellery 2,135.5 2,053.6 4

Technology 332.8 323.4 3

Investment 1,231.9 1,595.5 -23

- Bar & coin 1,029.2 1,048.7 -2

- ETF 202.8 546.8 -63

Central banks 371.4 389.8 -5

TOTAL (LSE: 524773.L - news) 4,071.7 4,362.2 -7

*Source: World Gold Council, Gold Demand Trends FY 2017

(Reporting by Jan Harvey, editing by David Evans)