HONG KONG • Sales of gold jewellery in China are set to plummet this year as the economic damage from the coronavirus widens.
The death toll from the outbreak has topped 1,100, and shoppers are staying away from public places to avoid infection, while also limiting their spending to basic necessities such as groceries. Jewellery retailers such as Luk Fook Holdings International are shortening business hours and managing time off for employees in an effort to prevent the disease from spreading.
"People are not in the mood to shop for jewellery," said Mr Zhang Yongtao, chief executive of the China Gold Association. "Stores and shopping malls are closed because of the virus," he said, adding that sales of gold jewellery and bars will drop substantially this year.
Metals Focus, a London-based research firm, sees a 6 per cent drop in sales in China this year, extending an estimated 7 per cent drop last year to a seven-year low. It said the decline could turn out to be "particularly acute" given the Chinese New Year has traditionally been the busiest period.
The crisis comes at a time when demand is suffering in China and India, the world's largest gold consumers, due to rising prices and slower economic growth.
Retailers are already reeling from the long-running pro-democracy protests in Hong Kong - and Luk Fook saw a significant drop in store sales across mainland China, Hong Kong and Macau during the Chinese New Year, said deputy chief executive Nancy Wong.
The company has implemented staff cost-saving measures and launched Valentine's Day promotions to cushion the impact of the virus.
Bullion is trading near the highest level since 2013 on lower interest rates, and as geopolitical tensions and the virus outbreak sent investors in search of haven assets. Spot gold was little changed at US$1,567.29 an ounce yesterday, and is up 3.3 per cent this year after posting an 18 per cent surge last year.
Hong Kong retailers could see their profit from the city drop this year amid the outbreak, according to Bloomberg Intelligence.