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Jewelry chains across the city of Hong Kong have been packed with shoppers since the gold prices dropped sharply last Friday.
Gold prices tumbled 9.3% on Monday, the sharpest drop in the past 30 years. The lowest gold sell price in recent days occurred to be HK$13,980 every liang (about $1,500 an ounce) on April 16, according to data released by Hong Kong Jeweller's & Goldsmiths' Association.
To take advantage of the sharpest price fall in decades, shoppers in Hong Kong has been snapping up gold products. As reported by local media, in the past three days, one ton of gold bars had been sold. Authorities has increased gold purchase order from Switzerland by four times as usual and the order is expected to arrive Hong Kong on April 24, said The Chinese Gold & Silver Exchange Society.
"The trend is similar in the mainland. Gold prices keep falling and I think it's a good time to buy cheap gold," said Ms. Jiao, a visitor from the Chinese mainland buying a gold bracelet at a Chow Tai Fook Jewelry branch located amongst the cluster of jewelry chains in the Causeway Bay shopping district. "I've come as a traveler and the jewelry designs seem better here in Hong Kong."
Visits of its chain stores raised 15-25% since the slump on Monday, said the spokeswoman of Chow Tai Fook Jewelry Group, the largest jewelry retailer in Hong Kong. The peak was on April 16, when store visits increased by 30-40% than usual. The price reached the lowest point that day.
Gold products are running out in some shops located in the areas of Central and Mongkok, the spokeswoman said. Hot sell products included gold bars, coins and wedding bracelets.
The price have not reached the bottom yet, said Linus Yip, strategist at First Shanghai Securities in Hong Kong. "The price would fluctuate to a lower point in the coming days," he added. " I don't suggest to invest in gold at this time."
The international gold prices has continued to hike for a decade during 2001 to 2011 and the price increased by 7 times during the period. On Sep. 6, 2001, the closing gold price stayed as high as $1,895. On April 15, 2013, the price dropped to $1,395, a steep fall of 26%.
As the pride of Croesus, gold is regarded an a hard asset and the safest investment for a very long time, but it reciprocated to decline since the fourth quarter of last year. The monetary easing policy of Japan on April 4 turned out to be the blasting fuse of the recent slump, said Yip.
"Gold has been a crucial investing tool against inflation and economic crisis," said Yip. "Unexpectedly, a series of loose monetary policies of several nations following Japan's quantitative easing has not set off inflation and failed to drive investors to gold. "
Furthermore, with a balanced recovery in the U.S. and situation in the Euro zone emerging to turn better, things are looking up for the global economy, he said. As a result, gold prices went down.
"The price reduction is a correction for the 'over heated' gold prices in the past decade," said Tse Kwok Leung, Head of Economics & Policy Research at Bank of China, Hong Kong. "The gold prices would remain in a lower level in the future."
