UPDATE 1-HK's Hang Fung says selling one tonne of gold

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By Polly Yam

HONG KONG, March 17 (Reuters) - Hong Kong jewellery and gift maker and retailer, Hang Fung Gold Technology Ltd (0870.HK), has started melting one tonne of gold exhibits and has been selling the metal since Friday, a company official said on Monday.

It had started selling gold holdings because the price reached $1,000 per troy ounce, Vivian Lai, senior corporate communications manager at Hang Fung said.

One tonne of gold is equal to around 32,151 troy ounces.

Spot gold XAU= surged more than 3 percent on Monday to record high of above $1,030 per ounce as the dollar tumbled on deepening U.S. financial concerns. The precious metal broke $1,000 on Friday.

"We are gradually melting and selling the gold," Lai told Reuters. She added the firm had started the process right after gold prices reached $1,000 last Friday.

See did not say how much gold it has sold since the start of the process.

"We will be watching prices in coming days, or weeks," Lai said, without elaborating on the timeframe of the completion of the sale and costs of the gold.

But she said costs for the bulk of the firm's gold exhibits were below $600.

After the sale of one tonne of gold, Hang Fung would hold about 4 tonnes of gold holdings, Lai said.

She said the firm wanted to keep 2 to 3 tonnes of gold exhibits for its showrooms, indicating that it would sell at least another tonne of gold in the future.

The firm in early January had sold one tonne of gold at $850 to $855 per ounce, creating a profit of about HK$100 million, Lai said. It had spent about one month to process the sale.

Hang Fung had melted 1 tonne of gold exhibits into bars with 99.99 percent purity for the sale in the Hong Kong market, its chairman Sai Wing Lam said on Jan. 4.

Lam then said the firm wanted to keep about 1.5 tonnes of gold and would sell a tonne at a time. (Editing by Tomasz Janowski)

(US$1=7.8 HK dollar)