NEW YORK — Welcome to the latest gold rush.
Prices for the precious metal have increased steadily in 2005, growing 13 percent to close the year at an average of $409 an ounce, according to the Jewelry Information Center, a New York-based trade association. Gold last week hit an 18-year high at $503 an ounce.
The higher prices have been triggered by several factors, including the power of the runway and consumers’ infatuation with yellow gold jewelry.
“Jewelry designers are taking cues more from runways and I don’t know if that was always happening before,” said Duvall O’Steen, jewelry promotions manager for the World Gold Council, a New York-based association of gold producers, referring to the widespread use of gold themes in fashions and accessories on the catwalks.
Stella McCartney was an early proponent with her spring-summer 2003 collection, when she threaded real gold chains through fabrics.
“Our customers have been purchasing yellow gold for quite some time from us,” said Lauren Kulchinsky, owner of Mayfair, which operates two jewelry stores in the Hamptons and one each in Woodbury, N.Y., and Commack, N.Y.
She said the retailer started to ramp up the selection of yellow gold starting five years ago.
Fashion trends heavily influence Mayfair’s sales. “I would say it drives 90 percent of the sales in the Hamptons stores and about 70 percent in the other stores,” Kulchinsky said.
Total U.S. jewelry sales rose 6 percent in the last year, with the karat-gold jewelry category up 9 percent, according to a recent retailer survey by Jewelers of America, a trade group in New York. Many firms said sales of yellow gold exceeded plan over the Black Friday weekend.
John Calnon, managing director in the U.S. for the World Gold Council, said higher gold prices aren’t necessarily bad for retail.
“When you have a slowly rising gold price, it is very good for gold because gold is in the news,” he said. “It is out there and it reinforces in the consumer’s mind the intrinsic value and investment value in gold.”
Jewelry designers are pleased about the increased attention for yellow gold pieces. But they unexpectedly are struggling with ways to offer more yellow gold, while keeping prices at levels that don’t halt the trend.
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Ron Hami, a designer noted for delicate pieces featuring diamonds on 18-karat white gold, said he is incorporating more yellow gold to be in step with fashion.
“I am transferring a lot of my designs to yellow gold and I am also incorporating a lot of yellow gold into new designs,” said Hami, whose collection is sold in Neiman Marcus and high-end jewelry stores.
He also noted that he has already been forced to raise the price on his diamond cross pendant — a staple in his collection — from $1,300 to $1,500 because of skyrocketing gold prices.
“I have been trying to hold back prices, but it is really hard,” Hami said. “I may have to raise it even more.”
Jewelry designer Philip Crangi said he has boosted some prices as much as 20 percent just to meet the bottom line.
“[The price of gold] has jumped so much in the past year,” he said.
The core Philip Crangi Jewelry collection contains items made from 14-karat yellow gold and stainless steel. In the long term, the use of stainless steel may be an economic advantage if gold prices remain high, he said. Yet, Crangi said he is still considering adding more yellow gold to his designs to “broaden the appeal.”
Meanwhile, Michael Taher, a jewelry designer and owner of American Dream Jewelry, with two stores in northern New Jersey, just last week introduced 14-karat gold necklaces featuring large gemstone pendants such as citrine and blue topaz. The goal was to offer the look of the large-size gold piece with less gold weight, said his wife and business partner, Lisa Taher.
Jewelry designer Fern Freeman is well-positioned to cope with fluctuating prices because of her heavy use of gemstones in her long link 18-karat gold necklaces, said Amanda Gizzi of the Jewelry Information Center.
At David Yurman, yellow gold jewelry “is our fastest-growing business right now,” said Carol Pennelli, company vice president.
Yurman offers 12 gold collections, with the South Sea Pearl group, a collection of 18-karat yellow gold pieces, each with South Sea pearls, remaining a top seller. Box chains in 18-karat yellow gold are the best-selling individual items.
Pennelli said there are no plans to raise prices. The company will review prices in January. Hopes are that Yurman’s large size and its ability to buy strategically will help hold its prices steady, she added.
Brian Ross, a partner of Reinstein Ross, a Manhattan jewelry firm, sees gold availability and pricing as the tip of the iceberg for the jewelry market. He pointed out that platinum has exceeded $1,000 an ounce, moving some designers to reach for palladium as an alternative. Gemstone prices are starting to escalate, too.
For now, he said, the price of gold will not affect the Reinstein Ross business.
“We are an older company and have more depth,” said Ross, who started trading gemstones after training in India some 25 years ago. The company buys gold every week and has absorbed fluctuations over the years.
“If gold starts moving up toward $600, then we would think about making an adjustment,” he said, adding he doesn’t expect everyone to be as calm about the $500 an ounce cost. “Those not used to paying that kind of price are going to have sticker shock.”