In May 2025, Hong Kong witnessed a nuanced retail landscape: while total retail sales rebounded modestly, rising 2.4% year on year to HKD 31.32 billion ($3.99 billion), sales of luxury goods—specifically jewelry, watches, clocks, and other valuable gifts—contracted by 3.2% to HKD 3.87 billion ($493.1 million). This divergence offers critical insights into the shifting dynamics of consumer behavior, external macroeconomic pressures, and sector-specific challenges.

Several interrelated factors contributed to the luxury segment’s decline. First, surging gold prices significantly dampened consumer appetite for jewelry purchases, as higher costs discouraged discretionary spending on big-ticket items. Second, demand for luxury products on the Chinese mainland softened, reducing the influx of high-spending tourists traditionally pivotal to Hong Kong’s retail sector. Lastly, increased outbound tourism encouraged local consumers to shop abroad, further eroding domestic sales.

From January to May 2025, hard-luxury sales dropped by 9% to HKD 20.27 billion ($2.58 billion), while overall retail sales fell 4% to HKD 155.05 billion ($19.75 billion). These figures highlight a broader recalibration within Hong Kong’s retail environment, reflecting evolving consumer preferences and economic headwinds.

Luxury jewelry spending in May saw a significant increase of 10.1% year-over-year, according to data from Citigroup. This figure stands in stark contrast to the U.S. Department of Commerce’s estimate of only 2.9% for the same period.Citigroup’s analysis is based on the spending habits of over 10 million U.S. credit card holders. In comparison, the Department of Commerce uses its own estimates, later revising them with actual transaction data.

Luxury watch spending also showed a substantial rise, with Citi reporting a 14.7% increase, while the Department of Commerce reported a more modest 2.4% rise.

Overall luxury goods spending, though still weak, showed signs of recovery in May, declining by 1.7% year-over-year. This is an improvement from April’s 6.8% decline and March’s 8.5% decline.

Since September 2024, luxury jewelry has consistently outperformed other luxury segments, including handbags and apparel. In May 2025, jewelry was the only category to experience growth in both average spend per customer and the number of individual customers. This suggests a growing consumer preference for jewelry over other luxury items like handbags.

• Strong US labour market data which indicated that businesses added more jobs than anticipated in June and that the unemployment rate unexpectedly fell to 4.1% served as a lid on gold’s gains and strengthened the case for the Federal Reserve to keep interest rates unchanged.
• It is anticipated that President Donald Trump’s big package of tax and spending cuts, which was adopted by the House on Thursday, will increase the national debt by nearly $3 trillion over the next ten years.
• In contrast, Trump announced that he will start writing to nations on Friday, outlining the tariff rates they will be subject to on US imports. This is a significant change from his previous promises to negotiate individual agreements.

Technical Triggers  

• Gold is expected to trade in the range of $3300 (~Rs 96000) and $3400 (~Rs 98500) this week.
• Silver has given a breakout of its range, trading above $37 (~ Rs 108,000). Now next target is $38 (~Rs 111,000)