With the dollar rising and the price of oil falling, gold is losing its value, meaning that jewelers from Tiffany & Co. to Pandora — and their customers — can expect to pay less for the precious metal. In October, the price of gold fell to a four-year low, and as of mid-December, gold was trading at $1,194.40 per troy ounce.
This story first appeared in the January 5, 2015 issue of WWD. Subscribe Today.
“Cheaper gold will provide margin headroom for the likes of Richemont and Swatch, which is quite convenient at a time when demand is soft,” said Luca Solca, managing director at Exane BNP Paribas.
In a recent report on the Danish retailer Pandora, Antoine Belge said silver and gold prices will remain “a substantial gross-margin driver” in the 2015-16 fiscal year. Separately, Belge told WWD that lower gold and silver prices would help a variety of companies, including Compagnie Financière Richemont SA, Swatch and Tiffany.
Sally Morrison, managing director of marketing and jewelry at the World Gold Council, said that while the organization cannot comment on how specific firms acquire their gold, the lower prices will impact markets differently.
“In Western markets, changes in the price of gold typically take months to feed through to consumers,” she said. “In Eastern markets, however, the changes in the price are almost immediately reflected in the price of the jewelry. In those markets, the retail price of jewelry is based on the weight of the piece, with a small premium added for a making cost.”