Gold, seen as a safe-haven investment, has emerged as one of the best performing assets this year with gains of 18 percent amid fears over the health of the global economy and waning expectations of U.S. interest rate hikes.

The price rally has triggered robust investment demand in China for gold bars, coins and exchange-traded funds, and could buoy imports into the country at a time when jewelry demand - which accounts for a bulk of its gold purchases - is weak.

"It has really got to do with the relative performance of gold as an asset class," said Richard Xu, fund manager of China's top gold exchange-traded fund (ETF) HuaAn Gold.

"We think that there might still be some shocks and uncertainties coming around from global markets that might be driving the risk aversion trade," Xu said.

Holdings of HuaAn Gold ETF jumped to 13.5 tonnes by the end of March from 3.2 tonnes at the end of last year.

Not only have hedge funds shown interest in the gold ETF, but also individuals who typically invest between 100,000 yuan ($15,461.93) and 1 million yuan, Xu said.

A gold ETF run by Bosera Asset Management has seen its holdings jump 63 percent from the end of last year to 2.285 billion yuan by March.

Industry players have said that China's demand for bars and coins this year is growing at a faster pace than jewelry, with volatility in its equity markets and concerns over the yuan's devaluation driving buyers to the safety of bullion. Typically, investment demand accounts for about 20 percent of total Chinese gold consumption.

"The Chinese have lost faith in the domestic equities market and remain cautious towards the property market - which left gold as one of the more sensible investments," said Samson Li, a Hong Kong-based analyst with GFMS, a metals consultancy owned by Thomson Reuters.

"A perfect storm in gold may be brewing in China," Li added.

New investment products have been launched in China to tap into the growing demand.

Last week, China Merchant Securities introduced a wealth management product linked to gold futures prices, the first such tool issued by a securities firm.

Guotai Asset Management Co and Bosera both launched new funds this month that will invest in gold ETFs.

"People are trying to diversify their investment due to the market turmoil. They are putting part of their funds into gold, in the form of ETFs or futures instead of just buying physical metal," said a bullion dealer with an international bank.