The sharp rise in gold prices this year has affected more than just investors looking for safer places than the stock market to stash their money.
Designers of demi-fine jewelry — the popular category designed for casual wear, and priced to encourage just modestly guilty shopping — are struggling with the increased cost, as are the retailers that carry their brands.
On Jan. 1, gold was priced at slightly less than $1,550 an ounce; by Oct. 1, it was hovering at $1,900 for the same amount. And prices have continued to fluctuate, including in the wake of the American presidential election. The change has been driven, as it often is during uneasy times, by the perceived security of investing in gold.
“It does make a huge difference and we have to be incredibly conscious about it,” said Zoë Chicco, the founder and designer of her namesake Los Angeles-based jewelry line, which is sold at department stores like Nordstrom, Saks Fifth Avenue and Bloomingdales, as well as boutiques like Browns in London.
“I have to be, like, ‘OK, I need to hit a price point that is between $500 and $700 to keep myself in this category, so what does that look like?’” she said. “‘How does that happen? Am I using a lighter-weight chain and am I using a smaller diamond?’ I kind of go backwards in the design process.”
She said that was how she created much of her current collection, which includes a delicate band with a tiny turquoise priced at $325, and a pair of slender hoops, each punctuated with a small diamond and freshwater pearl, that retails for $430.
Jane Collins, a senior strategist at the trend forecasting company WGSN, said the design industry was being forced to adapt: “The challenge will be in creating fun and highly creative design solutions.” But customers also will, in most cases, pay more.
Ms. Chicco said she planned to increase her prices in January. “It’s a really, really hard thing to do,” she said, “because the customer is used to seeing a certain price from this brand.”
Small gold items, designed to be attainable purchases even in a climate of anxiety about job losses and the long-term economic effects of the coronavirus, may be the highlights of many 2021 collections.
Pascale Monvoisin, a Paris-based jeweler whose designs are sold by retailers like Liberty and Net-a-Porter as well as at her own two boutiques in the French capital, is working on a collection of precious charms — a purchase that will cost about 30 percent less than a comparable pendant with a chain.
In June, Ms. Monvoisin’s company purchased two kilograms of gold, when the price was around $1,700 per ounce. The pieces made from that gold are in production and will be sold next year.
This year, although profit margins between March and October have decreased 8 percent to 10 percent over the same period in 2019, the brand has been eager to maintain its prices. “We think if we increase our retail prices, maybe people are not going to follow us,” said Aurélie Bressou, the brand’s chief executive. “We don’t want to lose them.”
But, Ms. Monvoisin said, increases may be inevitable. “We are not able to continue like this if gold is going up, up, up,” she said.
For Anna Sheffield Fine Jewelry, subtly tweaking some parts, like making clasps on some pieces smaller, has helped maintain prices. Such changes “might not alter the design terribly, but would give you a lower weight and a slightly lower cost on a finished piece,” said Ms. Sheffield, founder and chief executive of the New York-based brand.
The cost of gold reduced profits at Alex Monroe, a British jewelry brand, by 5 percent year-over-year just between March and October. So in January, prices of all its solid gold items will rise, some by around 20 percent, according to Emma Burgin-Fox, the brand’s creative director. A thin textured gold band with a 0.25-carat diamond that now retails for 1,730 pounds (about $2,280), for example, will be £2,100.
The brand also is considering increasing the prices next year of its gold-plated pieces, including pairs of earrings in the shape of bees and bunnies that retail for £120 now.
Even the prices of pieces with only small amounts of gold may change. “Rising prices affect everything,” said Martin Wright, the owner of Magpie Jewellery, a retailer with three boutiques in Ottawa. That includes, he said, pieces made of gold fill, a durable combination of gold layered around bronze.
Mr. Wright said that he had purchased items from some designers because he knew their prices would be rising. “That’s one way we can try to minimize the impact on the consumer,” he said, “but eventually the prices will have to go up.”
In August, Bing Bang, a lower-priced brand that Ms. Sheffield also founded, reduced the thickness of the gold plating on its larger items. “I have to monitor it, not just for fine jewelry but for Bing Bang as well, because even gold plating becomes exorbitantly expensive,” she said.
Some designers are, as another tactic, using more gemstones in their designs.
“Balancing out the price of gold with other materials is what I’ve seen quite a lot of,” said Ruby Beales, the jewelry buying manager at Liberty. “It’s precious metals, but it’s incorporating agate beads and mother-of-pearl. You still get a fine product, but it’s mixing in lots of other fun colors and different beads.” The store’s demi-fine selection for the holidays includes necklaces and bracelets from the London-based brand Aurum + Grey that are made mostly of beads crafted from semiprecious stones, with a few gold ones mixed in, and priced at £110 to £145.
Although sales of gold jewelry are down over all — they decreased globally by about 29 percent from July through September in comparison with the same period last year, according to a recent report from the World Gold Council — demi-fine sales have stayed strong. Alex Monroe’s sales during Britain’s first lockdown period, for instance, were up around 12 percent compared to the same months last year, according to the brand.
Tiny gold studs and delicate charm necklaces do seem well suited to Zoom calls in sweatpants. And their modest prices are further justification for many shoppers, especially millennial and Gen Z shoppers who are choosing to buy small indulgences for themselves while not spending as much money on travel, restaurants and clubs as in the past.
“It is perfectly consistent and makes sense with the overall economic trend of people who are still working, who suddenly have a lot of disposable income,” said Dr. Daniel Bachman, an economist at Deloitte. “If you’re thinking about 20-somethings who are employed, who know that they’re going to be able to be employed, they will be in that position.”
Sales of demi-fine jewelry do not “seem to have been affected by the pandemic at all,” said Ms. Collins at WGSN. “People are still buying.”
The perception for people who buy demi-fine jewelry, she continued, is that gold feels like a responsible thing to buy. “It goes back to that thing that fine jewelry is seen as an investment purchase,” she added. “It’s something that you can keep for yourself and it’s timeless.”
Gold’s price is still unsettled; one widely reported forecast earlier this year, from Bank of America, predicted it might rise to as much as $3,000 an ounce by the end of 2021. With that in mind, more cost-conscious jewelry innovations look likely.
“Once it gets past the $2,000-per-ounce price point, that’s when there starts to be an issue,” Ms. Collins said. “That’s when we’ll see designers and buyers start to really reconsider strategy.”
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