In the face of worldwide economic challenges, the values of precious metals have been rising steadily.
The cost of gold specifically has surged over the last year, climbing above 50%. For mid-sized jewelry businesses looking to provide elegant gold necklaces, earrings, and more at competitive price points against traditional luxury jewelry brands, gold futures could pose significant challenges.
Although gold frequently fluctuates in the market, investors have been increasing their gold investments over the past year due to recession anxiety and market unpredictability, as reported by Goldman Sachs. Gold is on track for its third consecutive year of double-digit growth, even reaching record highs this week amid the government shutdown.
On Tuesday, gold prices reached $4,000 per ounce for the inaugural time ever — and they show no signs of abating.
UBS analysts noted last week that declining interest rates, dollar weakness, and political instability will further propel gold prices upward.
“We now anticipate inflows this year to reach 830 metric tons, which is nearly double our original estimate of 450 metric tons at the year’s start,” the UBS analysts conveyed in a statement. “The main risk for gold is improved U.S. growth and if the Fed is compelled to increase rates in response to inflation-related surprises.”
A Goldman Sachs report from late last month projected this rise, predicting that gold prices will increase by 6% by mid-2026 to $4,000 per troy ounce, a unit of measurement utilized for precious metals. The report categorized gold buyers into two categories: conviction buyers, who consistently purchase the metal, and opportunistic buyers, who enter the market “when they sense the price is advantageous.”
The analysts expressed expectations that central banks will persist in purchasing gold for three additional years.
“Our reasoning is that central banks in emerging markets remain notably underweight in gold compared to their developed market peers and are progressively increasing allocations as part of a broader diversification effort,” analyst Lina Thomas stated.
According to July survey data from the World Gold Council, approximately 95% of central banks anticipate a rise in global gold holdings in the coming year.
This uncertainty contributes to an already unstable global economy affected by fluctuating tariff laws from President Donald Trump. Although he clarified in August that gold will not face tariffs and that bars from Switzerland will escape the country’s 39% tariff, Trump’s high tariffs on other nations have been upsetting the global supply chain.
For jewelers, the increasing cost of this precious metal could be alarming. Major retailers such as Pandora and Signet have indicated they are considering raising prices or exploring alternative manufacturing strategies to mitigate the impact of rising gold prices.
Additionally, some jewelry brands striving to provide gold goods at more affordable levels, like Mejuri, are also feeling the pressure.
Mejuri, which focuses on offering gold and luxury jewelry at more competitive prices than its rivals, announced last month that it had to increase prices due to the climbing costs of gold, silver, and tariffs.
“While we’ve been doing everything possible to absorb the impact and maintain the quality and craftsmanship you anticipate from us, you’ll notice some price updates on Monday, September 29th,” Mejuri stated in a message to customers. “We’re proactively addressing these changes: refining our supply chain, fortifying sourcing, and designing with pricing considerations in mind.”
The company mentioned that it is also developing new products like 10 karat solid gold to continue offering quality jewelry at competitive prices. Mejuri refrained from commenting further.
‘A fear indicator’
With the escalation in gold prices showing no signs of relenting, several jewelry companies are compelled to innovate with their pricing strategies and product offerings.
In its second-quarter earnings report in August, Pandora reported it experienced an 80-basis point impact due to rising costs of gold and silver, and it planned some price adjustments to counter those challenges. Similarly, during Signet’s latest earnings call in early September, the company indicated a greater than 30% hike in gold costs.
BaubleBar, which specializes in fine jewelry, provides a wide array of “demi-fine” gold items, which co-founder Daniella Yacobovsky stated has enabled the company to somewhat mitigate the impact of rising gold prices.
The brand’s demi-fine jewelry comprises a robust, high-quality 18k gold plating over a sterling silver base, allowing BaubleBar to avoid the expenses associated with solid gold pieces. The price range for the brand’s demi-fine earrings varies from $50 to $150.
“We have actually observed a notable surge in interest for demi-fine,” Yacobovsky told CNBC. “I believe it offers people an excellent alternative to solid gold. … You’ll obtain remarkable quality comparable to it for a reduced price point.”
Nonetheless, Yacobovsky expressed concern over the frequency of significant global economic events occurring at rates higher than even five years ago. She mentioned she had not witnessed something as volatile as the soaring gold prices in the sector “for an extended time.”
The critical factor, she noted, is for businesses to harness their ability to make prudent decisions.
For Alexis Bittar, CEO of his jewelry line, the wise choice involved focusing on gold-plated options, allowing the company to reduce expenses compared to solid gold, while slightly increasing prices to align with incoming products.
However, no re-pricing of current products is planned, Bittar clarified.
“You’re perpetually balancing the tariff implications and the rapid rise of gold prices, staying within a price range that you are recognized for,” Bittar stated. “From the consumer’s perspective, there’s not much concern. They are vaguely aware that gold prices are increasing … but psychologically, they possess an unspoken price point they expect to pay, and when you exceed that, you risk alienating them.”
Bittar mentioned his company notices a “cautious” consumer base, but any decline in spending is likely more associated with solid gold rather than plated options, as affluent consumers tend to be more amenable to price increases than those with lower or middle incomes.
Even for ear-piercing service provider Rowan, which also sells gold jewelry, the rapidly transforming industry may pose challenges. CEO Louisa Schneider told CNBC that it’s hard to envision any sector experiencing raw material costs that have escalated as dramatically as gold.
Because the ear-piercing process necessitates certain levels of surgical steel or titanium for optimal healing, Rowan often employs 14k gold to coat those materials, leaving the company “partially insulated” from the rising gold prices due to the need to adhere to specific health and safety standards.
Nonetheless, Schneider noted that Rowan had to increase prices on some gold products at the start of the third quarter, a change customers seem willing to accept as the company prioritizes using trained nurses for the piercings.
“This is a fear indicator. So that, from my perspective, is quite alarming,” Schneider expressed. “Our anticipation is that we do not witness a substantial decline in current prices – if anything, we foresee gold remaining notably expensive. Therefore, we will continue to hedge our position and collaborate closely with our suppliers.”
Schneider indicated she is observing an “inflection point” in gold pricing, which raises concern for all jewelry companies, but particularly those unable to adjust prices effectively given their focus on non-luxury consumers who are less adaptable to price changes.
Ultimately, she asserted that this serves as a cautionary signal for the wider economy, even if it might not be severely impacting Rowan.
“The demand is not stemming from consumers wanting to don gold or industries requiring gold as a component of production,” Schneider explained. “This demand arises from gold accumulation due to uncertainty surrounding the U.S. dollar, and that’s unparalleled to any previous scenarios we’ve encountered.”
Correction: An earlier version of this report inaccurately stated Signet’s sales figures.
