By Ese Erheriene 

Global gold demand was broadly unchanged last year, but a fall in supply could be positive for the market going forward, said the World Gold Council Thursday.

Demand in China, one of the biggest buyers of the precious metal, also fell, in another sign of that country's fragile economic state.

Overall, a surge in demand in the second half of the year countered a lackluster first half.

Total demand in 2015 weighed in at 4,212.2 tons, compared with 4,226.4 tons the previous year, according to the industry body's most recent Gold Demand Trends report. However, gold demand growth rose toward the end of the year--fourth-quarter demand was 1,117.7 tons, up 4% from the same period a year earlier.

The first half of 2015 "was a pretty weak quarter, but things really, really did pick up in the second half of the year," said Alistair Hewitt, head of market intelligence at the London-based World Gold Council.

The gold market has been in free fall since the summer of 2011, when prices exchanged hands at its peak price of $1,920.94 a troy ounce.

While still under pressure, global economic concerns and a weaker dollar have helped the metal kick off the year positively. The metal is up 11.5% since the first trading session of 2016, but down almost 40% in the last five years.

Jewelry demand, which makes up more than 60% of total gold demand, fell 3% year-over-year to 2,414.9 tons in 2015 from 2,480.8 tons in 2014, driven by declines in key markets.

For China and India, which together make up around half of global gold demand, it was a tale of two diverging gold giants.

Chinese appetite for jewelry decreased 3% to 783.5 tons last year, with consumers displaying caution in the face of growing economic uncertainty as the country continued its bumpy deceleration in growth.

"The Chinese economy is slowing a little bit, we've had stock market turmoil...and for people looking to buy consumer goods, it makes them potentially think twice," said Mr. Hewitt.

In India meanwhile, annual demand rose 5% to 654.3 tons--the third-highest year on record--driven by seasonal celebrations and a slide in the price of gold both in the fourth quarter, which encouraged buying. Buyers in Asia are often considered bargain-hunters, as they typically enter the market when prices have fallen significantly to pick up the metal more cheaply.

Elsewhere, central bank purchases increased 1% year-over-year to 588.4 tons as countries sought to diversify their foreign reserves.

Total bar and coin demand world-wide increased 1% to 1,011.7 tons in 2015, from 1,000.5 tons the year before. On a regional level, bar and coin demand in China weighed in at 201 tons, up 21% on 2014. In the U.S., price-sensitive consumption increased in the latter stages of 2015, surging 53% overall to 73.2 tons.

Meanwhile, global supply slumped 4% lower year-over-year to 4,258.3 tons. Mine supply increased at its lowest level since 2008 at 1%, while recycled gold dropped 7% to 1,092.8 tons--an eight-year low.

Looking ahead, the World Gold Council said it is too early in the year to reveal an official outlook for the pace of gold demand in 2016. Declining production, from announced supply cuts and fresh cutbacks from miners, should support prices going forward, though.

"Back in 2012, mining companies slashed their corporate costs, their exploration and development budgets [and so] the pipeline of new gold mines is really thin," said Mr. Hewitt. "So, over 2016 we expect these factors to continue to weigh on mine production...and I wouldn't be surprised if it ended up dipping."

Spot gold was trading up 0.3% at $1,192.92 an ounce on the London spot market, hovering near an eight-month high.

Write to Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

February 11, 2016 00:14 ET (05:14 GMT)