Gold sales plummet in Hong Kong as mainland demand slumps

Gold sales at jewellers in Hong Kong have declined this year as mainland shoppers bought less, according to the Chinese Gold & Silver Exchange Society, adding to signs of a slowdown in consumption by the world's largest user.

Demand dropped about 30 per cent from a year ago during the "golden week" national holiday that began May 1, according to Haywood Cheung, president of the century-old bullion bourse. There were fewer visitors this year as luxury spending fell and gift-giving slowed, he said.

Lower bullion consumption in China this year may help to extend declines in prices as investors press on with sales from exchange-traded products. While China surpassed India as the largest user last year, the buying frenzy that was sparked by gold's slump into a bear market last April has not been repeated, according to Heraeus Metals Hong Kong.

"Before, when they walk into a jewellery shop, they spend about HK$10,000 and now it's about HK$5,000 to HK$6,000," Cheung said, citing estimates by the society's members, which include Chow Tai Fook Jewellery Group. "Also, travel is so common now that people don't have to wait for the golden week."

The metal tumbled 28 per cent in 2013 to end a 12-year rally, with last year's lower prices spurring increased consumption across Asia.

An anti-corruption drive in China has hurt gold demand this year, which is back at 2012 levels after an exceptional 2013, said Dick Poon, general manager at Heraeus, a precious metals trader and refiner.