Demand for gold rose in 2016 to a three-year high, aided by keen investment appetite for the precious metal, the World Gold Council said Friday in a report.

Total demand for gold -- whose twin drivers are jewellery and investment buying -- advanced two percent to 4,309 tonnes compared with 2015, London-based industry body WGC said in a report.

However, in the final three months of 2016, overall demand retreated 11 percent to 994.1 tonnes from a year earlier.

Investment demand rose in the first, second and third quarters of 2016 by inflows into exchange-traded funds (ETF) -- which allow investment without trading on the futures market. But this hit reverse in the fourth quarter.

Jewellery demand meanwhile sank over the year on the back of higher gold prices.

By the end of September 2016, prices had jumped 25 percent as dealers flocked to the safe haven and fretted over global economic worries including Brexit and US election uncertainty.

But the market ended 2016 with an increase of just eight percent, relinquishing some of its gains after President Donald Trump's conciliatory acceptance speech and the US Federal Reserve's December interest rate hike.

"The turning point was the US election. Global market reactions to the election outcome surprised most analysts," the WGC noted in its report.

"Not only did the result remove a significant element of uncertainty among investors, but Trump's growth-boosting rhetoric increased US interest rate expectations and pushed the US dollar higher.

"This triggered profit-taking among some investors, and a sharp correction (lower) in the gold price."