Gold prices slump for seventh straight day

China's gold bargain hunters suffered losses after the precious metal saw its price slump for seven consecutive trading days as of Friday.

The most traded Comex gold contract, for June delivery, dropped 1.6 percent to close at $1,364.70 per ounce Friday, recording $109 losses in price during the last seven sessions.

The huge drop may result in almost 10 percent in losses for China's gold buyers who rushed to snap up the yellow metal after it saw the biggest daily price tumble since 1983 on April 15.

From April 22 to 26, the period that saw the largest weekly gold consumption in China, the weighted average price of the metal in the spot market stood at 292.01 yuan ($47.51) per gram, according to statistics from the Shanghai Gold Exchange. However, as of Friday, the price fell to 279.41 yuan. Given the 10 to 15 yuan per gram commission fees for investing in gold bars, a large percentage of China's gold bargain hunters will suffer losses of up to 9.5 percent.

"Their losses will likely continue to grow as gold is expected to experience a bear market in the next one or two years at least," Li Ning, a gold analyst from Shanghai Cifco Futures, told the Global Times Sunday.

According to Li, the recent drop in gold prices was largely due to the metal losing its appeal as a safe haven investment as a result of greater confidence in the US economic recovery, and this factor will continue to hit gold prices. Meanwhile, growing market pessimism on the future movement of gold prices will in return cause further decline, Li said. SPDR exchange-traded fund (ETF), the largest gold ETF in the world, has reported an outflow of 311.5 tons, or 23 percent, in its holdings year-on-year as of Saturday.

"So it is not wise to further purchase gold as an investment as currently it is hard to see where the bottom price is," Li said.

However, the price fluctuation will not have a fundamental impact on gold consumption in China, due to limited investment channels in Chinese capital markets and stable demand for gold as gifts for brides and babies, Zhang Bingnan, secretary-general of the China Gold Association, told the Global Times.

China's demand for gold surged 20 percent year-on-year to 294 tons in the first quarter, while demand for gold jewelry jumped 19 percent, and gold bars and coins consumption increased 22 percent. However, global gold demand fell 13 percent during the same period, according to data from the World Gold Council.