The premium on gold bars in Hong Kong has jumped 2.5 times as local and mainland investors continue to pile into the precious metal to take advantage of falling prices.
Gold has rebounded by more than US$100 per ounce in the five trading days to Monday, from a low of US$1,321 last week. However, it weakened after disappointing factory data in China yesterday, with spot gold losing up to 1 per cent in Singapore and London to about US$1,413 an ounce.
The fluctuation has done little to deter the city's eager gold enthusiasts.
Demand for bullion is five times above the normal level, according to Haywood Cheung Tak-hay, president of the Chinese Gold & Silver Exchange Society.
"Many Hong Kong jewellers, gold bar manufacturers and banks have opted for physical gold to meet retail customer demand after prices plunged last week," Cheung said.
Thanks to the Chinese desire for gold, "9999" gold bars in Hong Kong sell at a premium to the London spot gold price.