Hunt for bargains after gold price falls the most since 1983
Jewellery and bullion lovers in Hong Kong and mainland fork out as precious metal tumbles
The plunge in the price of gold has triggered a buying spree for jewellery and bullion in Hong Kong, Shanghai and Beijing as some investors judge the decline has gone far enough.
"The sell-off is overdone as there's no fundamental support in the shift of gold demand," said Mitul Kotecha, head of global markets research Asia for Credit Agricole CIB.
In fact, gold in London swung back 3.6 per cent to US$1,401.24 an ounce after tumbling 14 per cent over the past two trading days. Prices fell 9.1 per cent on Monday, the most since 1983, and have lost 29 per cent since their peak in September 2011.
The dramatic decline stemmed in part from a belief that the US and China are unlikely to push further strong economic stimulus measures, reducing the appeal of gold, a hedge against inflation. The weak global economy has dampened the appeal of commodities. Troubled Cyprus could also sell its gold reserves and other nations might follow.
Still, bottom-fishing on gold is risky. "It's a bit like catching a falling knife if you try to guess where the bottom is," Kotecha said.
A Credit Suisse report on Monday said initial support for gold would be at US$1,310, followed by US$1,156 and US$1,122.