Gold prices keep rising, and jewelry companies are sounding the alarm

The price of gold has been skyrocketing, with a over 50% increase in the past year, and it’s showing no signs of slowing down. This surge in gold prices is largely driven by expectations of further U.S. rate cuts and political uncertainty. As a result, investors have been increasing their holdings of gold, with Goldman Sachs reporting that gold is on pace for its third straight year of double-digit gains.

On Tuesday, gold prices hit $4,000 an ounce for the first time in history, and analysts from UBS predict that lower interest rates, weakness in the dollar, and political uncertainty will continue to drive the price of gold higher. In fact, UBS analysts expect inflows for this year to be 830 metric tons, almost double their initial forecast of 450 metric tons at the start of the year.

Impact on the Jewelry Industry

The rising price of gold is having a significant impact on the jewelry industry, particularly for midsize companies that aim to offer fine gold products at lower price points than legacy luxury brands. Companies like Mejuri, which offers gold and luxury jewelry at more affordable prices, are feeling the pressure. Mejuri recently announced that it would be raising its prices due to the rising cost of gold, silver, and tariffs.

Other companies, like BaubleBar, are finding ways to adapt to the rising price of gold. BaubleBar offers a range of “demi-fine” gold pieces, which feature a thick, high-quality 18k gold plated over a sterling silver base. This allows the company to avoid the costs associated with solid gold jewelry and offer products at a lower price point.

Strategies for Jewelry Companies

Jewelry companies are having to get creative to counteract the rising cost of gold. Some companies, like Pandora and Signet, are exploring price hikes or alternative manufacturing methods. Others, like Alexis Bittar, are leaning into gold-plated pieces and raising prices slightly to match the products that are coming in.

Ear piercing company Rowan is also feeling the impact of the rising price of gold. While the company is somewhat insulated from the rising price of gold because it uses 14k gold to coat surgical steel or titanium for ideal healing, it still had to raise prices on some of its gold pieces in the beginning of the third quarter.

A Fear Indicator

The rising price of gold is not just a concern for jewelry companies, but also a warning sign for the broader economy. According to Louisa Schneider, CEO of Rowan, the demand for gold is not coming from consumers who want to wear gold or industries that require gold as a component of manufacturing, but rather from a hoarding of gold given an uncertainty around the U.S. dollar.

This uncertainty is driving investors to seek safe-haven assets like gold, and it’s a trend that’s unlikely to change anytime soon. As Schneider notes, “This is a fear indicator. So that, from my standpoint, is quite concerning.” The rising price of gold is a sign of a larger economic uncertainty, and it’s a trend that jewelry companies and investors will be watching closely in the coming months.