The price of gold has plummetted over the past week, as global economic factors have yet again had an impact on the raw material costs for jewellers.

An initial drop of 9.2% on Monday & Tuesday took gold to a two year low of £914 an ounce, from £1,035 an ounce just one week earlier and £1,111 at the beginning of the year.

Various factors have been cited for the cause of the dramatic drop in value, including the U.S. Federal bank hinting at their slowing of the practice of quantitative easing (pushing up inflation and making gold a less likely product for investment), the decision of Cyprus to sell off their gold reserves (and the fear that other EU countries such as Italy and Spain may see this as an option for the future) and the slowing down of the Chinese economy (resulting in less demand for commodities as a whole).

For those of us who abandoned the use of solid gold in our jewellery at some point over the past ten years and are reading this now, thinking that this won't affect us, the news is that all metal prices have experienced this recent dramatic fall. Silver, platinum, copper, steel and aluminium have all taken a tumble. The real question is, how long will it last and what effect will it have on the jewellery market?

Many analysts are predicting that the prices will continue to fall, as the conditions that they see as having caused the slump in prices are still in place. Others point to a stablization in prices over the past couple of days as an indicator that the cost of gold will now level out or recover, although anecdotal evidence suggests that widespread purchases of gold amongst the populations in Asia could be responsible for this possible anomaly. Others still have always thought of the rocketing gold prices as an unnatural ‘bubble' which is bound to burst and return gold values to a more realistic level at some point.

All of this presents something of a conundrum for jewellers. Working margins are and will prove to be something of a challenge in the future. If the rising cost of gold over the past decade has proved to be a headache for selling jewellery, think nothing of the pain that will come with trying to make and sell in an environment of falling commodity prices.

On a more frivolous note, it will be interesting to see what happens to the size, shape and trends of jewellery in seasons to come, given that rising metal costs have had such a marked influence on jewellery designs and materials over the past years.

Whether this is the start of another massive shift for jewellers and makers in the UK, or simply a ‘blip’ in the markets, there is little doubt that we will all be watching metal prices very carefully over the coming days and weeks.

Jayne Coulson

44 Hockley Street



B18 6BH

Tel: +44 (0)121 507 0994

Company number 07258309

ICO Registration No: ZA460029