Jewelry market will pay the high gold price
By http://www.jewellerynetasia.com
The international jewellery industry is set to feel the effects of the US’s debt crisis, after worried investors poured their money into gold as a traditional safe haven last week. The price of gold hitting $1778.30 per troy ounce.
Worried investors are now putting their money into the precious metal in the wake of the financial instability in the USA, and amid fears that the country will be downgraded from its AAA creditor status. This has also been compounded by concerns over the European market, where countries such as Greece are also experiencing financial difficulty.
The problem in the US is certain to affect the jewellery market in Europe. Consumer appetites for gold jewellery have already been hit by the soaring cost of gold and further increases are almost certain to worsen the situation.
Despite this gold metal is actually on-trend at the moment in Europe and jewellery brands have been trying to get around the problem and offer the same look for less by using gold in smaller increments or by creating pieces with cut-outs to reduce the weight, and therefore the price. However, further increases in the cost of gold will only make this harder to do.
It would be tempting to say that soaring gold prices would benefit platinum, silver and palladium jewellery sales. But all precious metal prices are volatile right now, at a time when consumer confidence is severely dented. In the UK the latest round of hallmarking figures show that the number of precious metal items hallmarked fell by 29.6% in the second quarter of 2011, against the same period in 2010.
This follows a 12.6% drop in the first quarter of this year, with volatile precious metal prices, and in particular silver, blamed.
Last week I wrote about the revelation that silver jewellery giant Pandora is struggling, and while that has largely been attributed to bad management and over-expanding its product offering, you have to wonder if this says something about the public’s appetite for even silver jewellery.
It will be interesting to see how these sudden price increases will affect the jewellery market. My expectation is that we’ll see consumers shopping less often but opting for well-made quality pieces when they do from either the brands that they know and trust or by buying from emerging jewellery designers that offer real design-led pieces, or we’ll see shoppers buying more costume jewellery from the high street.
In terms of volumes of jewellery sales soaring precious metal prices are clearly going to make an already difficult time worse.
As a result it has never been more important for jewellery brands to make sure that they stay ahead of the competition by making sure that their products are innovative and special to catch the consumer’s eye, while jewellery retailers equally must ensure that their level of customer service is better than each of their competitors in order to give them the edge.
Only time will tell how much this affects the jewellery market, but one thing is for sure, it’s going to be a bumpy ride.
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