Hochstick gold prices test Mettle from luxury -watch brands

After a year with high gold prices, the manufacturers of luxury watches with heavy precious metal head pain were left behind. Where a year ago bought procurement teams with around 2,300 US dollars per ounce gold, the number is now around 3,300 US dollars per ounce, an increase of 40 percent. Only a few analysts predict a correction in the still volatile stock markets.

Luxury watch companies are dependent on the sale of gold clocks. According to the Federation of the Swiss Watch industry, watches in precious metals, including materials such as platinum, made almost 40 percent of the entire Swiss Watch exports according to value, but only 2.7 percent according to volume.

Many brands have passed on the costs to consumers. Rolex, the largest watchmaker in the Swiss watch industry, increased the prices of their gold watches by 8 percent at the beginning of this year after two price increases were raised in 2024. A second increase will be expected next month.

Others cut their stocks and withdraw hundreds of gold models from the market. According to data collected by the marketing agency Digital Luxury Group, based in the first three weeks of April, the average price of a Cartier watch on the brand of the brand of the brand after a 63.8 percent inventory reduction fell by 30.4 percent, since gold clocks were withdrawn with higher prices.

DLG also found that the price climber has been more pronounced by US President Donald Trump since the beginning of April and has reached a price increase of 17.5 percent for watches over $ 100,000. Roségold watches were most affected, with prices rose by 23.5 percent against an inventory of 16.4 percent and marking a dramatic shift in balance.

Smaller brands try. “We use the gold that we bought last year, but we are not reorganized unless it is important,” says Edouard Meylan, managing director of Independent Swiss Watchmakers H Moser & Cie and states that the demand for roségold watches is still high and that “we have sold a lot of gold watch to people in the past few weeks.

While the numbers do not contain any clocks, according to Gold Council, the World Gold Council fell from 538.5 tons to 434 tons in the same period of this year. Worldwide demand rose by 1 percent compared to the previous year, which is due to an increase in gold investments of 170 percent.

“I cancel all of the gold that is not 100 percent necessary because I don't know how to evaluate it, and because gold clocks are at the moment with the slightest margin,” says Mylan. “I focus on steel and ceramics.”

For others, the only way is to further increase the increase in prices. “We increased prices at the end of last year and all have to increase prices again,” says Romain Marietta, Chief Products Officer at Zenith, one of the Swiss luxury guards of LVMH.

For Moser and Zenith, gold clocks make up around 20 percent of the annual volumes, but 30-35 percent of sales. “The price of white gold in particular has become too high for series production products and now even for limited expenses,” says Marietta. “You have a retail price that is not competitive with the large brands that produce gold clocks in volume.”

At the moment, golden watches have the highest risk with the slightest margin

Luca Solca, a senior analyst of the research company Bernstein, covers global luxury goods, expects rising gold prices to create clear winners and losers. “The most coveted brands will be able to plow this through – for example Rolex,” he says. “Lower brands in the Consumer Hack Ordinance have to adapt to lower volumes.” Right “will be the name of the game – that is, reduces costs and reduces the capacity.”

Previously, it was assumed that buyers of luxury items with a high ticket were less sensitive to prospects than buyers of entry -level products, but according to Marietta, signs have changed. “We thought the higher segment would be untouched and the real die -hard collectors who can afford these watches would not be sensitive to prospects,” he says. “But we have to rethink and pay attention to the price sensitivity.”

According to Marietta, Zenith has assigned its attention to the development of models in metals such as Platinum and Tantal, both rarely and more difficult to machine than gold and possibly better margins. The main start of the brand this spring was the GFJ caliber 135, a 160-part limited edition clock in platinum, which has a price of almost $ 100,000 on an optional platinum bracelet.

According to Oliver Müller, founder of Swiss Luxury Consultancy Luxonsult, the cost effects on brands are even more serious than for the first time, since a gold clock housing is made from a golden bar with a five-fold-out thing of the end product. Scrap keep their value and can be recycled, but the preliminary effort is punishable. “Brands not only have to compensate for the increase in raw material prices, but also the financial costs,” he says. “This has a significant impact on the cash flow.”

With increasing gold prices, Some retailers say that the demand for gold clocks does not show any signs of slowing down. “In our market, we find the demand for precious metal watches relatively inelastic,” says Mohammed Seddiqi, Managing Director of Ahmed Seddiqi, the largest dealer for watch and jewelry dealers in the United Arab Emirates. “Customers who are enthusiastic collectors and lovers continue to acquire golden time meters.”

While some manufacturers said they would reduce the volumes of gold clocks, says Seddiqi, he expects brands to meet its orders. “We remain sure that the offer remains consistent due to the demand for watches,” he says. “At the moment we have a regular influx of watches, whereby regular programs are fulfilled.”

Analysts suggest that brands have to concentrate on innovating other or even new, precious metals. “A solution would be to avoid precious metals and concentrate on other materials,” says Müller. “Richard Mille is the epitome of the use of plastic for the value of gold. But then you risk losing market shares on the high -end. This is still the strongest market segment. Alternatively, you reduce the gold quantity in your watches, for example, by extrudent components.

One solution would be to avoid precious metals and to concentrate on other materials

Mylan predicts some significant material shifts. “White gold will die because steel is cheaper and fashionable, while we may have to replace gold with materials such as Palladium and Tantal,” he says. “Over time, gold watches can be as expensive as platinum watches with increasing scarcity.”

But working with alternative metals cannot cut it. “From our experience, customers who want to acquire a gold watch always acquire a gold watch, regardless of whether there are platinum, palladium or tantalous versions,” says Seddiqi. “Your decision -making is usually not driven by alternative options.”

Another effect of increasing gold prices could be an increase in used prices, since buyers want to use a decline in the market that, according to Morgan Stanley, has experienced 12 consecutive quarters of the decline. But Charles Tian, ​​founder of the Watchcharts Preesed Market Tracker and co-author of Morgan Stanley's quarterly market reports, says that the secondary market does not experience any significant shifts due to the increasing gold price. “The main reason for this is that the value of the gold in the watch is not essential compared to the overall market value. Even if gold rose by 40 percent last year, this most likely means an increase of no more than 10 to 15 percent compared to the total value of a clock.”

He notes that gold clocks, especially Rolex models, have exceeded steel models in the past five years and have increased by 32.3 percent in the middle values, compared to 66.4 percent for steel. Nevertheless, he adds, the cooling on the secondary market in the past three years since Pandemic's watch investment rush, which sent prices, means that buyers do not appear in the category today.