Rising Gold Prices Challenge Luxury Watchmakers

Luxury watch brands are facing significant challenges due to soaring gold prices, which have risen by 40% over the past year. While gold was priced around $2,300 per ounce last year, it has now reached approximately $3,300 per ounce. This sharp increase is putting pressure on the profitability of many watchmakers, especially those reliant on gold for their high-end timepieces.

For Swiss watch companies, gold watches account for a substantial portion of sales value. In fact, gold watches made up almost 40% of total Swiss watch exports by value last year, although they represented just 2.7% of the volume. In response to rising costs, many luxury watch brands have raised prices. Rolex, for example, increased prices of its gold watches by 8% in early 2025, following multiple price hikes in 2024.

Some brands, however, are adjusting their strategies by cutting back on gold watch inventories. Cartier, for example, reduced its gold watch offerings by 63.8%, resulting in a significant drop in prices for certain models. Additionally, higher-priced gold watches, particularly rose gold, saw a price rise of up to 23.5% following the introduction of U.S. tariffs.

Smaller brands are also feeling the pinch. Many are using the gold they purchased at last year’s prices but are avoiding reordering new stock unless necessary. The high demand for rose gold watches remains strong, but gold is now seen as a riskier material with lower profit margins. Some smaller manufacturers are shifting their focus to other precious metals like platinum and tantalum, which may offer better margins but are more difficult to work with.

The rise in gold prices is also affecting global watch markets, with some retailers noticing continued strong demand for gold watches, particularly among collectors. Mohammed Seddiqi, CEO of the UAE’s largest luxury watch retailer, notes that demand remains steady, despite the higher costs. However, watchmakers are expected to innovate and explore other precious metals as alternatives to gold to maintain profitability.

The situation has sparked discussions about how brands might need to evolve, with suggestions to use less gold in watch production or explore materials like palladium, which could help mitigate rising costs. However, many clients continue to prefer gold, making it a key material for luxury watchmakers despite the challenges.

In conclusion, while rising gold prices create hurdles for luxury watchmakers, brands will need to find innovative solutions to balance their production costs with consumer demand, ensuring they remain competitive in a changing market.