Hong Kong retailers report they were swamped over the three-day May Day holiday by tens of thousands of mainlanders in search of one thing: cheap gold.

After the recent slump in gold prices, Hong Kong's already healthy community of gold shops, mainly in its traditional tourist areas, has increased, with a flurry of new openings. But traders report they have been overwhelmed by the mainland shoppers.

Gold prices in Hong Kong are lower than in the mainland.

On Wednesday in Causeway Bay there were long queues outside shops, which blocked the popular shopping area's narrow streets and sidewalks.

"It's cheap, so what else do you need to know?" said Wang Zhongxin, a shopper from Shanghai as he left one Chow Tai Fook outlet.

He had spent around 30,000 yuan ($4,760), or twice the monthly average wage in Hong Kong, on three gold necklaces and a couple of rings. He said he wanted to buy bullion, but they had already sold out.

Wang's mentality echoed that of many mainland gold shoppers, who believe the recent price slump had opened a perfect window to stock up on the precious metal.

"The gold price will definitely rise in the long term," he added.

Shoppers like Wang have been emptying gold stores in the mainland before coming to Hong Kong.

Beijing Caishikou Department Store, the biggest gold retailer in Beijing, has been seeing daily sales worth up to 100 million yuan since late April, several times their usual sales. Local media reported that the store had taken on extra staff to cope with the gold rush.

The China Gold Association reported that gold sales had tripled on many days.

The price of gold bullion has so far fallen 14 percent this year as investors worldwide sold the metal after a decade-long rally.

Gold spot traded at $1,473.18 per ounce on Wednesday, around 7 percent lower than on April 11, the day before a 14 percent two-day tumble, the worst since 1983.

But many institutional investors have viewed the price slump as temporary and an over-reaction.

Mitul Kotecha, head of global markets research Asia and global head of foreign exchange strategy with Credit Agricole, wrote in a research note last month that the recent sharp drop in the price of gold looked "overdone", with some "bargain hunting" likely, in terms of jewelry demand.

Over the longer term, he added, central bank diversification into gold will lend some support and limit the pace of the price decline.

"We will likely see a slower pace of price decline, underpinned by continued purchases from the official sector," he wrote.

HSBC Holdings PLC said it believed a pick-up in demand from China and India, combined with producers cutting their supplies, will support a stable recovery in the gold price.

Chinese customers are not the only ones snapping up bargain gold.

Gold coin sales by the United States Mint are heading for their highest levels in three years.

Sales totaled 209,500 ounces in April, up from 62,000 ounces a month earlier, data on the mint's website revealed. The amount for December 2009 was 231,500 ounces.

Demand for gold in India, the world's biggest consumer, is double the level for this time of year, Rajesh Mehta, chairman of Rajesh Exports Ltd told Bloomberg on Wednesday.

gaochangxin@chinadaily.com.cn