For the world’s biggest jeweller by market capitalisation it seems that all that glitters is, er, actually gold. On Wednesday Hong Kong listed Chow Tai Fook said its revenues surged 63 per cent from a year earlier in its first quarter which ended in June. That was because sales of gold jewellery doubled to make up 69 per cent of total sales. The shares leapt 13 per cent on the news, which helped to reverse at least some of the 40 per cent fall since the jeweller listed a year and a half ago.

It was external factors that helped boost Chow Tai Fook’s performance. Chinese buyers of its products were taking advantage of the 12 per cent decline in gold prices over the quarter. But the demand for gold hurt margins. Although the jeweller is yet to announce first-quarter earnings it admitted that gross profit margin probably slipped 3 percentage points. The shift towards mass market gold products dragged average selling prices down by about 5 per cent from a year earlier over the quarter.

With inflation returning in China and the economic slowdown putting other investment options such as property, shares and wealth management products at risk, demand for gold should continue. That is just as well because, without the gold buffer, Chow Tai Fook is largely dependent on rapid store expansion to boost growth. Same-store sales surged 48 per cent in the first quarter because of gold, but this was off a 3 per cent fall for its last full year. True, store expansion slowed to half the rate it was expanding at last year in the first quarter – to three stores a fortnight. But this is set to accelerate again to meet a target of 2,000 stores by March next year, from 1,856 now.