ANALYSIS - Surging Gold Price Can Boost Appeal of Platinum and Silver Jewellery

02 May 2023

By David Brough

A surging gold price has led some manufacturers to consider shifting to more affordable lower-carat gold jewellery and has created opportunities for some retailers to promote more competitive platinum and silver lines.

Prices of the yellow metal soared to 13-month highs, exceeding USD $2,000 per ounce, after the collapse of U.S.-based Silicon Valley Bank in March, triggering a banking crisis that led investors to pile into “safe-haven” gold.

The sharp rise in the gold price led Turkish manufacturers exhibiting at the Istanbul Jewelry Show in March to express concerns over weakening demand for 18-carat gold jewellery during an international cost-of-living crisis caused by stubbornly high inflation after the pandemic. A 24 per cent year-on-year drop in hallmarked gold items in the UK in March, upheld their concerns.

“Jewellery buyers are looking for stability,” said Murad Kosker, owner of Murad Jewellery, a Turkish exporter of gold and diamond jewellery.

While rising gold prices impact the jewellery market, investors may turn to bullion, say in bars, as a “safe-haven” investment.

A trend in the middle tier of the UK jewellery market for more offerings of 9-carat gold jewellery was likely to be reinforced by the present gold price strength, with gold this week hovering just under USD $2,000 per ounce, said Himanshu Shah, director of Hatton Garden-based jewellery manufacturer Andre Michael.

"The trend for a shift to 9-carat has already been going on for a few years, and could continue perhaps a little stronger now in light of the latest rally,” he said.

At the top end of the market, Bond Street jewellers are not expected to compromise on offering 18-carat gold pieces.

"We are committed to offering 18-carat gold jewellery in designs created using the highest standards of craftsmanship," said Louise de Turckheim, acting chief marketing officer of David Morris jewellers on Bond Street, referring to long-term contracts with suppliers.

Ultra-wealthy jewellery aficionados seek 18-carat jewellery despite the lofty price of gold, as they prize the highest standards of beauty and rarity.

Similarly, in the British Asian jewellery market, there is no compromise on 22-carat gold items, which continue to be greatly sought after due to the enduring appeal of gold’s “store of value” status and the long-standing Asian cultural affinity for the precious metal.

“Demand for 22-carat gold is going up despite the recent rally of bullion prices – the latest price increases reinforce people’s belief in the value of high-caratage jewellery,” said Jayant Raniga, CEO of London retailer PureJewels.

Retail jewellers can seize the opportunity to promote platinum and silver jewellery more vigorously, as the cost of these white metals is becoming more competitive, compared with 18-carat white gold.

In Italy, a leading manufacturer of gold and silver jewellery, Marco Carniello, who directs jewellery trade fairs such as Vicenzaoro and Oroarezzo in the leading Italian goldsmithing hubs of Veneto and Tuscany, said some manufacturers were turning towards silver production in response to the rally in gold.

Prices of silver are a small fraction of gold, but silver can be used effectively in sophisticated precious jewellery designs.

“The current soaring price of gold has to bring opportunities for any brand that works with sterling silver and retailers who stock good sterling silver jewellery,” said Judith Lockwood of silver jewellery brand TI SENTO Milano, an NAJ member.

“The TI SENTO range has a wide choice of 18-carat yellow-gold plated pieces that suddenly become interesting to the ‘gold consumer buyer.’ Particularly with our more prestige/iconic pieces retailing from around £329 for a large link bracelet and up to £1,399 for a statement necklace. Giving the look, the style and the enjoyment of a solid 18-carat gold piece.”

(Disclaimer: any opinions expressed in this column are solely those of the author and are not a recommendation to buy any type of product.)

Source: David Brough