Gold prices have seen a meteoric rise in the last year, having jumped over 50%. See some examples below of how jewelry companies are reacting in shock to this unprecedented increase. They are now trying to understand how it is affecting their business models. On Tuesday, gold prices jumped to a record high of $4,000 per troy ounce. This milestone represents a new high watermark for the market in commodities.
Goldman Sachs just came out with a bullish report on gold forecasting $2000/oz gold. For one, they predict a continued increase of 6% until around mid-2026. As a result of this forecast, gold is expected to skyrocket to $4,000 per ounce again. This increase underscores the continued appetite for the valuable metal, particularly amid global economic uncertainty. Central banks globally and including China, India and Russia will continue to be among the most active gold buyers for at least the next three years. In fact, almost 95% of them anticipate increasing their foreign gold reserves over the next 12 months.
The effects of increasing gold prices are deeply traumatic throughout the entire jewelry business. Businesses like Pandora and Signet have detailed how they’ve been disproportionately impacted by these rising expenses. Over the past year, Pandora has seen an 80-basis point drop in its margins. This decrease is directly attributable to the increasing values of gold and silver. In reaction, the company has announced upcoming increases in fares to offset this pressure.
Signet is continuing to test for new price increases. In addition to developing breakthroughs into alternative manufacturing processes to pivot in the face of ongoing global market impacts. UBS analysts have noted that big box retailers are abandoning price-centric strategies. They’re doing this to address the economic pressure from the rising prices of gold.
The jewelry brand known for its ability to coat small, surgical steel or titanium pieces in 14k gold has already begun raising prices on its gold items. That change took place at the start of this quarter. Rowan’s business model addresses part of the rising costs of gold headlong. It provides them political cover and keeps them competitive among the various new industries they’re looking to attract to their state.
Alexis Bittar, CEO of his eponymous jewelry company, has refocused his line around gold-plated pieces to save on costs. He understood the difficulty of maintaining low prices that customers demand. Simultaneously, he was under the gun from rising gold prices.
“You’re constantly juggling between the tariff and the acceleration of the gold prices, so you’re staying within a price point that you’re known for,” – Alexis Bittar
Additionally, even with consumer knowledge of increasing gold prices, consumers are still purchasing gold in a behavioristic pattern not affected by the price increase. Bittar commented on this trend, explaining that consumers have an “invisible price point” they will pay.
“From the consumer side, they’re not really caring. They vaguely know the prices of gold are going up … but mentally, they have an unconscious price point that they’re looking to spend, and when you start to way exceed it, you’re pricing people out,” – Alexis Bittar
The root cause of the increasing price of gold is three-fold. The heightened investor demand comes in part due to fears of recession and persistent market volatility. The geopolitical landscape has played a role. Significant tariffs imposed during Donald Trump’s administration have disrupted global supply chains, further complicating the situation for retailers.
Having witnessed a huge surge in demand for demi-fine jewelry, Daniella Yacobovsky Cash-strapped consumers are more actively than ever looking for alternatives as gold prices hit record highs.
“We’ve actually seen a really huge increase in interest in demi-fine,” – Daniella Yacobovsky
“This caters to a growing demographic of consumers looking for an alternative that doesn’t skimp on quality,” noted Yacobovsky, specifically referencing demi-fine jewelry.
“I think that it offers people a really fantastic alternative to solid gold.… You’re going to get a really fantastic quality similar to that for a lower price point,” – Daniella Yacobovsky
As central banks continue to bolster their gold reserves, the jewelry industry faces an uphill battle in managing costs while meeting consumer expectations. These market dynamics combined suggest that the jewelry sector will need to tread these choppy seas cautiously.
Schneider warned about what’s happening in today’s market. He noted how demand was not just fueled by consumer desire for wearable gold, or from an industrial need to use gold in manufacturing components.
“The demand is not coming from consumers that want to wear gold or industries that require gold as a component of manufacturing,” – Schneider
After a tentative holiday season, retailers are becoming more and more worried. Continuing geopolitical tensions and economic instability are fueling this worry, emphasizing that increasing gold prices serve as a fear gauge in the market.
“This is a fear indicator. So that, from my standpoint, is quite concerning,” – Schneider