Opinion
Gold rally pushes Italian jewellers to make leaner designs
Sharp day-to-day swings in the price of gold and silver have a direct effect on retail prices as raw material costs are directly passed on to customers
In Italy’s storied gold-making hubs, jewellers are reworking their designs to trim gold content as they race to blunt the impact of record prices and appeal to shoppers watching their budgets. Gold prices hit a record high earlier this week, surging near $5,600 an ounce, more than double a year ago as geopolitical concerns and jitters over trade pushed investors towards the safe-haven asset.
The rally is putting undue pressure on small artisans as they face mounting demands from clients including international brands to produce cheaper items, from signature pieces to wedding rings, according to interviews with four independent jewellers in Italy’s main jewellery-making hubs.
"The main question that I’ve heard in the last months is if I can produce something lighter while having the same appearance,” said Massimo Lucchetta, owner of Lucchetta 1953, an independent jeweller which makes items for department stores in Bassano del Grappa, near Italy’s premier gold-crafting hub of Vicenza in the country’s northeast.
Vicenza, known as one of Italy’s three "cities of gold” alongside Arezzo in Tuscany and the Golden Valley of Valenza in Piedmont, hosts twice a year the Vicenzaoro fair, a global event for jewellery and watchmaking. In Arezzo, several jewellery makers have stepped up the use of machinery that keeps a piece’s shape while cutting its metal content, said Giordana Giordini, owner of independent jewellery brand Giordini.
That could, for instance, keep the size of a pendant unchanged but cut its weight in half: "The person is still buying the same idea of what it is,” she said from her workshop in Arezzo. Giordini supplies wholesalers and some retail stores, with nine out of 10 of its products shipped to international markets.
Italy in 2024 accounted for 11.2% of the $130bn global jewellery market, according to a recent study by bank Mediobanca. Over 6,800 companies operate in the gold, silver and jewellery industry in Italy, employing almost 34,000 people, the study says.
Cecile Cabanis, finance chief at luxury behemoth LVMH, said the price of gold had a negative impact on the performance of its watches and jewellery business, which includes high-end jewellery brands like Bulgari and Tiffany. That comes even though the French conglomerate, which has its flagship gold manufacturing site in Valenza, has implemented hedging measures, including the use of financial derivatives and negotiating the forecast price of future precious metals deliveries, according to its yearly report.
The pressure on smaller workshops is, however, more acute. They are unable to hedge, due to the expense and the risks of trading in financial derivatives.
Sharp day-to-day swings in the price of gold and silver have a direct effect on retail prices as raw material costs are directly passed on to customers, said Giordini. A gold necklace that cost €300 ($358) some months ago may now be priced at €500, she said.
Giordini said fluctuations in the price of gold can affect the costs facing businesses like hers by tens of thousands of euros, as they pay for raw materials upfront.
Valenza jeweller Alessia Crivelli, who is also the vice-president of trade group Confindustria Federorafi, said another option for producers is to recover and reuse scrap metals from their own production lines. Using recycled or resold gold is, however, close to impossible because it can be difficult to certify its origin.
While high-end clients may view gold jewellery as an investment and remain willing to absorb higher prices, the need to also serve the less affluent consumers is driving the focus on reducing weight, said another producer from Valenza.
"If brands need a certain price positioning, they ask us in development to pay more attention to the final weight,” the producer added, asking not to be named because of client confidentiality concerns. Wedding rings, where weight constitutes a significant share of the cost, are becoming a focal point in price sensitivity for couples: "If before they spent around €600, today they may have to spend more than 2,000,” the producer said.
However, demand for gold jewellery is expected to endure as consumers continue to look at the metal as a store of value. "In the end, they pay for gold because they want it to be gold,” said the producer.