LONDON, April 4 (Reuters) - Gold demand will change little this year from 2017 levels as slim gains in physical investment and jewelry and industrial demand are partially offset by a drop in central bank buying to its lowest since 2010, according to an industry report.
Global gold demand is seen at 3,969 tonnes in 2018, up 1 percent from last year's levels but some 10 percent below the average for the last five years, consultancy Metals Focus said on Wednesday in its Gold Focus 2018 report.
"Physical investment is projected to grow by 4 percent this year. China will account for the largest share of gains, thanks to improving price expectations and a desire for safe-haven assets," it said.
Central bank buying is expected to slip 6 percent to 350 tonnes, however, an eight-year low.
"Net official sector purchases are forecast to decline slightly," it added. "We expect Russia and Turkey to maintain a similar pace of acquisitions to 2017 ... excluding these two, net buying is likely to remain relatively low.
Gold prices could rise as high as $1,450 an ounce this year, it forecast meanwhile, a five-year peak, as equities hit the buffers, the U.S. dollar weakens and global growth falls short of expectations.
While in the near term investors continue to be committed to equities, holding investment in gold in check, there was scope for gold prices to break higher later in the year, it said.
"When, rather than if, equities correct, we will still be faced with depressed yields," Metals Focus director Nikos Kavalis said in a statement accompanying the report. "At this point, investor rotation back into gold, even on a modest scale, should help take it to around $1,450 by year-end."
Ahead of that, the prospect of further U.S. interest rate hikes, which boost the opportunity cost of holding non-yielding bullion, will likely keep a lid on gains, it said.
The gold market surplus, which fell by a third last year, is expected to ease to 510 tonnes from 548 tonnes in 2017, it said. Prices are forecast to average $1,345 an ounce, just 1 percent above last year's level.
Investment in gold-backed exchange-traded funds is tipped to fall by a quarter to 150 tonnes this year, its lowest since 2015.
Mine production is forecast to be broadly flat at 3,295 tonnes, Metals Focus said, while supply of recycled gold is expected to edge up 2 percent to 1,185 tonnes. (Reporting by Jan Harvey, editing by David Evans)