Gold prices hit a record high in late January, approaching $5,600 an ounce, more than double the level of a year ago, as geopolitical concerns and nervousness around trade drove investors to the safe haven asset.
The rally is putting strong pressure on small craftsmen as they say customers, including international brands, are increasingly demanding cheaper pieces ranging from signature jewelry to engagement rings, four independent jewelers from Italy’s main jewelry centers told Reuters.
“The main question I hear in recent months is whether I can make a piece lighter while keeping the same appearance,” said Massimo Lucchetta, owner of Lucchetta 1953, an independent jewelry company that makes pieces for department stores in Bassano del Grappa, near Vicenza, a leading center of goldsmithing in northeastern Italy.
Vicenza, known as one of Italy’s three “golden cities” along with Arezzo in Tuscany and the Golden Valley of Valenza in Piedmont, hosts the Vicenzaoro fair twice a year, an international event for the jewelry and watch industry. According to Giordini’s Giordana Giordini, owner of the independent jewelry brand Giordini, in Arezzo a number of manufacturers are more actively using equipment that allows them to retain the shape of the piece while reducing the metal content.
According to a recent study by Mediobanca, Italy will account for 11.2% of the $130 billion global jewelry market in 2024. In Italy, more than 6,800 companies operate in the gold, silver and jewelry industry, employing nearly 34,000 people, the study said.
Cecile Cabanis, chief financial officer of luxury giant LVMH, said rising gold prices have hurt the performance of the watches and jewelry business, which includes high-end brands such as Bulgari and Tiffany.
The pressure on smaller workshops is even more acute. They cannot hedge because of the costs and risks associated with derivatives trading. The sharp daily fluctuations in gold and silver prices are directly reflected in retail prices, as the cost of raw materials is directly passed on to buyers.
