Gold's wild rally traps jewelers between soaring costs and cautious customers

"When Isaac Yuan started working in his uncle's jewelry factory in Hong Kong two decades ago, gold cost around $400 per troy ounce. In October, the metal neared $4,400 an ounce. The 43-year-old, now cofounder of Eli J Fine Jewelry in Singapore, calls the latest surge the most dramatic he's witnessed in the jewelry business. "Everybody is talking about it. The move from $3,000 to $4,000 per ounce was really quite crazy," Yuan told Business Insider, referring to gold's price gains since March."

"Gold's epic rally this year has lifted the world's favorite precious metal to record highs, leaving jewelers around the world struggling to balance costs, design, and demand. Gold prices have surged more than 50% this year as investors piled into safe-haven assets, while central banks also stepped up their gold buying amid global geopolitical tensions. The spot gold price hit a record high of about $4,400 per ounce on October 20 before retreating sharply."

""We try to absorb some of the cost if it's reasonable. We don't want to shock our customers, especially regulars," Sim said. Eli J's pieces are primarily made from 18-karat gold, which is 75% pure gold. As spot prices surged in recent months, the jeweler raised prices "by a few hundred dollars" per piece on average. That means profit margins could tighten by up to 10% this year, the couple said."

Gold prices have risen more than 50% this year, reaching a record spot high near $4,400 per ounce in October before easing to about $4,000. Investors sought safe-haven assets and central banks increased purchases amid geopolitical tensions. Jewelers face higher material costs, prompting price increases, tighter profit margins, and changes in design and metal choices. Some retailers absorb part of the rise for regular customers, while others shift customers from 18-karat to 14-karat or offer platinum alternatives. Ready-to-wear items use thinner gold to keep prices accessible, and customer demand has moved toward lower-karat, lower-cost options.

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