Gold prices have surged to unprecedented levels, sparking a wave of activity in Hong Kong’s jewellery shops as residents rush to buy or sell the precious metal. On Tuesday, global gold prices hit a record high of US$2,942.70 per ounce, marking a more than 10% increase this year alone. This follows a 26% rise in gold prices in 2024, the largest annual jump in 14 years.
Locally, the price of gold has mirrored the global spike, reaching HK$27,040 per tael (US$3,466 for 37.9 grams), a 35% increase since the start of 2024.
Jewellery shops in the city are benefiting from the soaring prices, with a notable influx of customers. Fook Tai Jewellery Group, which operates seven retail outlets, has experienced a significant uptick in foot traffic. While many customers are seeking to sell their gold, others are looking to make purchases before prices climb even further. Most gold retailers in Hong Kong accept clients’ old jewellery in exchange for cash or new products.
“Since May of last year, many customers have come to cash in their gold jewellery,” said Anita Lee, product manager at Fook Tai Jewellery Group. “At the same time, we see many mainland visitors buying gold jewellery, particularly those planning weddings, as they fear further price hikes.”
In addition to jewellery, some customers are opting for gold bars and coins, betting on further price increases.
“When gold prices rise, people often sell their existing jewellery,” said Robert Lee Wai-wang, vice president of the Hong Kong Gold Exchange. “For those who bought their jewellery years ago, this is a great opportunity to make a profit.”
For example, individuals who purchased gold in October 2023, when prices were at their lowest in recent years at US$1,809.50 per ounce, could now see a 63% return on their investment by selling at current prices, excluding transaction fees.
Lee noted that there is still potential for gold prices to rise, further attracting investors to the market.
“Some investors missed out during last year’s gold rally,” Lee explained. “With prices likely to increase further, many believe it’s not too late to invest now.”
The surge in gold prices is driven by heavy purchasing by central banks, including the People’s Bank of China, as part of a broader strategy to diversify their reserves and hedge against inflation risks. In 2024, central banks globally purchased 1,045 tonnes of gold, just shy of the record 1,082 tonnes bought in 2022, according to the World Gold Council.
Looking ahead, Anderson Cheung, head of global commodities at Best Profit Capital, predicts gold could soon reach US$3,000 per ounce, with the potential for a 20-25% increase this year, pushing prices to around US$3,400.
However, for some local residents like Katie Chan, the timing of these price hikes is causing distress. Chan, who is planning her wedding later this year, has seen the price of traditional gold bridal jewellery—such as the gold dragon and phoenix bracelets—skyrocket by more than 60%, now costing around HK$32,300 for a pair weighing one tael.
“Gold jewellery is essential for a Chinese wedding,” Chan said. “But it’s painful to see the price reach a record high right now.”
Faced with the steep prices, Chan is considering alternative options, such as borrowing jewellery from relatives or selling some of her own pieces to help fund the purchase.
Related topic:
What Does The Trading Risk Rate Of Gold Futures Mean?
