The usually consistent price of gold jewellery in the city has slipped down from 118 yuan (US$14.27) to 115 yuan (US$13.91) this week as China's larger cities, such as Beijing and Nanjing, engage in a fierce price war for gold.

The gold price is generally led by the international gold market and the price of raw materials sold by People's Bank of China, according to sources with Shanghai Gold Jewellery Price Adjustment Centre.

But the current price drop hasn't brought expected sales increases for gold jewellery in the city.

A sales girl from the Lao Miao Gold Store in Town God's Temple, Beijing's most famous gold store, said she hadn't noticed any increase in the number of customers this week. "Everything is as normal," she said, "I have found that many people don't even know there has been a price cut."

The reduction of three yuan (US$0.36) per gram is too slight to attract buyers, said Qi, a jewellery store manager. A 20-gram necklace is only 60 yuan (US$7.26) cheaper than before, a price difference equal to the cost of a compact disk.

In the 1980s however, a small gold price adjustment led to increased interest amongst residents.

"At that time, gold jewellery was a kind of currency that maintained its value," said Qi, "But now people are more interested in its design and function than its price."

Nowadays, the cheapest gold jewellery in Beijing is around 85 yuan (US$10.28) per gram. In Nanjing some gold stores give a 60 to 70 per cent discount off the original prices.

"Most of them are promotional gimmicks thought up by businessman," said Qi, "They raise the original price so that after the big discount, the price is almost the same as that in Shanghai."

It is not known whether the price of gold jewellery will continue to fall.

Industry insiders have said however, that the price of platinum and other jewellery won't decrease in the near future.