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Hong Kong shoppers take a break from gold as prices reach six-year peak amid US-China trade war

13 July 2019

 

Hong Kong shoppers are balking at buying gold ornaments, even for a wedding dowry, as the price of the precious metal has jumped to a six-year peak in recent weeks.The high prices mean more bad news for gold demand, which was already lacklustre thanks to the US-China trade warand the Year of the Pig being seen as unfavourable for getting married under the Chinese calender, according to traders.

 

The strength of gold prices looks set to gain steam on the back of looming interest rate cuts in the United States in the coming months and a weaker US dollar, they said.“More clients have been trading-in gold bars they bought some years ago for a profit recently,” said a veteran trader at Lee Cheong Gold Dealers in Sheung Wan. “Many retailers will wait for prices to come down to shop for a dowry unless they are in a hurry.”Spot gold prices hit US$1,416 (HK$11,079) per ounce on Friday, among the highest since 2013. The price has gained 6.2 per cent in the past month and about 11 per cent since the beginning of this year.For the past six years, the price of the precious metal primarily moved around US$1,000 to US$1,200.

 

According to the World Gold Council, a trade body formed by leading mining firms to promote demand, the price will, with some pullbacks, rally further, fuelled by two rounds of expected interest rate cuts in the US, geopolitical tensions between Washington and Iran and the exit of Britainfrom the European Union.“Sales have been affected at jewellery shops,” said Lau Hak-bun, chairman of Kowloon Pearls, Precious Stones, Jade, Gold and Silver Ornament Merchants Association.“Those who are still buying are mostly mainland Chinese spenders who are more into gold investments and buy when prices pull back a bit.”Passing a dozen jewellery stores on King’s Road in North Point on Friday, the Post found that more than half had no customers. Sales staff were reading newspapers or enjoying the air conditioning.

 

“Business is not that good, usually Hongkongers will buy if they need it,” said an owner of Dainty Jewellery, which has operated in the district for about 60 years. “It is not like years ago, when people were clamouring to buy.”She said it was hard to predict how demand would fare because of the trade war.At the shopping hub of Causeway Bay, where most jewellery shops are big chain stores, several were empty despite the Friday night crowds. Customers at other stores mostly left empty-handed.The government has blamed the trade war for poor retail sales, which dropped 1.3 per cent in May and 1. 8 per cent in the first five months year on year.Sales of jewellery, watches, clocks and valuable gifts were down 2.7 per cent in May and 4.4 per cent in the first five months of this year compared with the same period last year.

 

Source:https://www.scmp.co

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