Gold jewellery sales down 80 per cent in Hong Kong this year as Covid-19 puts paid to weddings, birthday parties

The number of marriages in the first 10 months of 2020 fell 40 per cent, dulling demand for gold jewellery, a traditional Chinese gift for newlyweds
While jewellery sales have tanked, the price of the precious metal has gone through the roof as investors sought safety from myriad global uncertainties

Weddings

Enoch Yiu

Published: 8:30am, 30 Dec 2020

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Gold jewellery sales in Hong Kong fell by almost 80 per cent this year as the Covid-19 pandemic spoiled countless wedding parties and other celebrations, according to an industry estimate.

As disappointed couples were forced to cancel their wedding festivities, so their guests’ plans to buy them gold jewellery as gifts – a Chinese tradition – turned to dust. Sales had already taken a pounding in 2019 as civil unrest rocked the local economy.

Though sales of jewellery have tanked this year, the price of the precious metal itself has gone through the roof as investors have bought it as a safe haven from myriad global uncertainties. It is expected to drop by up to 10 per cent in 2021, however, after climbing by almost a quarter to a record high this year, analysts predict.

One bridegroom, surnamed Cheng, had planned to buy gold jewellery for his wedding party in June, before it was postponed until December because of the outbreak. He has now had to delay his nuptials again because the pandemic is still not under control.

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“I want to invite over 400 guests, including many foreign friends, to attend my wedding,” he said.

The pandemic has brought cross-border traffic to a standstill this year, and left many a wedding plan in tatters with guests unable to attend. The number of registered marriages in Hong Kong in the first 10 months of 2020 was 20,663, a sharp fall of 40 per cent from the same period a year ago, government data showed.

“This is the worst year in decades, as many of our gold jewellery retailer members found their sales dropped almost 80 per cent year on year because the pandemic has led many people to postpone their wedding plans,” said Haywood Cheung Tak-hay, president of the Chinese Gold and Silver Exchange Society, the local gold exchange.

Haywood Cheung Tak-hay, president of the Chinese Gold and Silver Exchange Society pictured at the Chinese New Year opening ceremony in Sheung Wan in February 2019. Photo: Dickson Lee

“Many people also cancelled banquets or parties for their newborn babies, birthdays or retirement, which also affected sales of gold as gifts.”

It is a tradition in Chinese culture for newlyweds and their relatives to buy gold jewellery such as bangles inscribed with dragon and phoenix motifs as a dowry for the bride or as a wedding gift.

Family and friends also like to buy gold jewellery for newborn babies, retirees and as birthday gifts.

The Hong Kong government has imposed a wide range of social distancing rules to contain the spread of the coronavirus, including a restriction of no more than 20 people at weddings.

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“This is a shame, as the Year of the Rat in 2020 is auspicious for getting married and having babies. Many of our jewellery retailer members wanted to see a boost this year after sales plummeted by 40 per cent in 2019 largely because of the anti-government protests. But the outbreak dashed all hopes,” Cheung said.

Cheung is more optimistic about the outlook for next year, forecasting a 50 per cent rebound in sales.

“When the outbreak is more under control, it is likely many delayed wedding banquets will be held in 2021,” Cheung said.

The global price of gold had risen 24 per cent this year to US$1,866 per ounce as of December 28, easily beating the benchmark Hang Seng Index which fell 6.7 per cent.

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“Gold had a strong year in 2020, breaching a historical high at US$2,075 per ounce in August, as investors want to invest in safe assets amid concerns over political tensions between the United States and China, the coronavirus pandemic, inflation and an uncertain global economic outlook,” according to veteran independent gold analyst Jasper Lo.

The precious metal reached its previous peak of US$1,920 in 2011.

The price in Hong Kong has risen in tandem, hitting HK$17,475 (US$2,255) per tael (1.33 ounce) on December 28. A pair of gold dragon and phoenix bracelets weighing one tael cost about HK$21,000 on that date, which is 31 per cent more expensive than the HK$16,038 it cost at the start of the year.

Lo believes the gold price may drop more than 10 per cent in 2021 to US$1,650 and may go no higher than US$1,950 as countries start to introduce vaccines to contain the health crisis.

“Gold fortunes will really depend on the course of the US dollar through 2021,” said Stephen Innes, chief global market strategist at Axi, an international forex trading company.

“Since I’m more bullish on the US dollar, I suspect after a reflationary bounce above US$1,950 per ounce in the first quarter, gold will fall amid vaccine optimism and drop to US$1,600 by year-end as inflation and the economic recovery will see central banks start to pull back on easy money.”

This article appeared in the South China Morning Post print edition as: Gold jewellery sales slump 80pc as covid-19 spoils party