Jewelry stores in Hong Kong and mainland China are bustling with activity again after months of low sales as consumers take advantage of the rapidly rising gold prices. Jewelers are reportedly seeing an increase in foot traffic to their stores as waves of customers flock to sell their gold jewelry.

Last year wasn't a good year for jewelry store operators in Hong Kong as the months of civil unrest had essentially resulted in a drastic drop in sales throughout the city. However, the recent gold price hike that has sent prices up by more than 10 percent since the start of the year has resulted in a flood of consumers selling their bracelets, wedding rings, earrings, and other gold items to get a return on their investments.

 The continued spread of the novel coronavirus in the country has forced some consumers to cash out on their gold investments as prices have now reached a seven-year high. In contrast, investors on the stock market are now pulling out their equities investments and are rushing to buy into so-called safe-haven assets, which include gold.

 In Hong Kong, local gold prices hit a high of HK$15,540 per tael or roughly $1,998 per 37.9 grams last week. As of Friday's closing, prices settled at around HK$14,670 per tael. International gold prices had its highest jump on March 9, up by 1.5 percent to $1,703 per ounce, following the stock market crash due to the collapse of the pact between Russia and Saudi Arabia.

Given the high prices, most Chinese now have the "sell high, buy low" mindset. Some consumers have mentioned that most of the money they will gain from selling their gold now would be used to buy gold later when prices go down.

Hong Kong jewelry chain operator Fook Tai Jewelry Group revealed that it saw a 50 percent year-on-year increase in customers selling gold during January and February this year. The company's product manager, Anita Lee, stated that customers in China and Hong Kong are particularly price-sensitive. Most will immediately take action during sudden price fluctuations, buying big during low prices and selling during high prices.

Jewelers welcome customers who sell and buy gold at their establishments as it does give then several benefits. For one, the exchange will foster long-term customer relations, which means that customers who can sell and buy gold at an establishment tend to come back in the future.

Another advantage is that jewelers who buy gold purchased from other stores can make money through fees. Gold bought from customers is also cheaper for jewelers that buying the precious metal from gold traders. The items they buy can be sold as is or be melted and made into other products.