HONG KONG: Hong Kong's yuan-denominated gold trading slumped 78% from its January peak as bullion prices tumbled, sales at jewelry retailers slowed and the currency weakened, said the city’s century-old bullion bourse.
Average daily trading volume was 533 million yuan (US$83.9 million) this month, compared with 2.38 billion yuan in January, Chinese Gold & Silver Exchange Society President Haywood Cheung said in a May 29 interview.
Both months fell short of the 4.9 billion yuan target that Cheung announced when the contracts, about 80 percent of which are designated for physical delivery, were introduced in October.
Gold demand in China, the second-largest consumer, may stagnate this year, as declining prices put off investors and slower economic growth crimps sales, according to Lao Feng Xiang Co., the nation’s largest maker of gold jewelry.
“Members aren’t willing to supply gold for physical delivery when gold prices are low,” Cheung said. “Goldsmiths are getting less renminbi because sales have slowed down. They might opt to deposit the yuan at banks instead of buying gold.”
The precious metal is set for a fourth monthly decline, the longest losing streak since 1999. Spot gold has fallen 11 percent in that time to $1,548.88 an ounce yesterday in London.
The yuan-denominated gold contract in Hong Kong traded at 316.7 yuan per gram, or the equivalent of $1,413 an ounce, according to data on the Chinese Gold Society’s website yesterday. (Bloomberg/tw)