The rising cost of gold has created significant challenges for luxury watchmakers, leaving them grappling with rising production costs and changing market dynamics. Over the past year, gold prices have surged by 40%, climbing from $2,300 per ounce to approximately $3,300. With stock markets remaining volatile, few analysts predict an imminent price correction.
Luxury watch companies, which rely heavily on gold and other precious metals, are feeling the pinch. According to the Federation of the Swiss Watch Industry, watches crafted from precious metals—including platinum—accounted for nearly 40% of the total value of Swiss watch exports in 2024, though they only represented 2.7% of exports by volume.
Many high-end brands have responded by passing these increased costs onto consumers. Rolex, the largest Swiss watchmaker, raised prices for its gold watches by 8% earlier this year, following two price hikes in 2024. Another price increase is expected in the coming month.
Others have resorted to reducing inventories, pulling hundreds of gold models off the market. Data from Geneva-based Digital Luxury Group revealed that in the first three weeks of April, the average price of a Cartier watch available on its US website dropped by 30.4% due to a 63.8% reduction in stock, particularly among higher-priced gold watches. The marketing agency also found that prices for watches above $100,000 had risen by as much as 17.5% in response to US President Donald Trump’s tariff announcements in early April. Notably, rose gold models saw the sharpest price increases, rising by 23.5% despite a 16.4% drop in their inventory.
Smaller brands are also feeling the pressure. “We’re using the gold we bought last year now, but we’re not reordering unless absolutely necessary,” says Edouard Meylan, CEO of independent Swiss watchmaker H. Moser & Cie. He noted that while demand for rose gold watches remains strong, rising gold prices have made it difficult to maintain profitability. “In recent weeks, we’ve sold many gold watches to customers looking to invest,” he adds.
While the World Gold Council reports a decline in gold demand from the jewelry sector, dropping from 538.5 tonnes in Q1 2024 to 434 tonnes in Q1 2025, the overall global demand for gold rose by 1% year-on-year, primarily due to a 170% increase in gold investment.
Meylan, however, is hesitant to expand his gold inventory. “I’m canceling all gold purchases that aren’t absolutely necessary because pricing gold watches is too risky right now,” he explains. “At this moment, gold watches carry the highest risk with the least margin.” Instead, he is focusing on steel and ceramic models, which offer more stability in cost.
For larger brands, such as Zenith, price increases have become unavoidable. Romain Marietta, chief product officer at Zenith, said, “We increased prices at the end of last year, and we’ll likely need to raise them again.” Gold watches make up about 20% of their total annual volume but contribute around 30-35% of sales. However, the high cost of materials like white gold has made it increasingly difficult to offer competitive retail prices for their limited editions.
Luca Solca, senior analyst at Bernstein, believes that rising gold prices will create winners and losers within the luxury watch industry. “The most desirable brands, like Rolex, will be able to weather the storm,” Solca says. “Lower-tier brands will face challenges, needing to adjust to lower volumes and reorient their strategies, focusing on cost-cutting and reducing capacity.”
There are indications that even high-end consumers, traditionally seen as less price-sensitive, are beginning to feel the pinch. “We thought the top tier would remain immune to price changes, but we’re noticing price sensitivity in this segment as well,” says Marietta. This shift suggests that the broader market is becoming more attuned to the rising costs.
To adapt to these conditions, Zenith is turning its focus to more expensive and rarer materials like platinum and tantalum, which are harder to machine than gold but may offer better margins. This spring, the brand launched the GFJ Calibre 135, a limited-edition watch made from platinum and priced at nearly $100,000.
Luxury consultant Oliver Müller points out that the impact of rising gold prices on watchmakers is deeper than it appears. “A gold watch case is machined from a bar of gold that weighs five times more than the final product,” Müller explains. “Brands have to not only absorb the rising costs of raw materials but also deal with the financial burden of these increased prices, which significantly impacts cash flow.”
Despite these challenges, some retailers report that demand for gold watches remains robust. “In our market, demand for precious metal watches remains relatively inelastic,” says Mohammed Seddiqi, CEO of Ahmed Seddiqi, a leading watch and jewelry retailer in the UAE. “Collectors and aficionados continue to seek out gold timepieces.”
However, as some brands scale back their gold watch offerings, Seddiqi is confident that supply will not be significantly affected. “We expect brands to meet our orders as usual, with regular shipments arriving consistently,” he says.
Analysts suggest that brands may need to explore alternatives to traditional precious metals to cope with rising gold costs. Müller proposes that brands might focus on other materials, such as plastic or composite metals, to reduce costs. However, this strategy could alienate high-end buyers, who still prioritize traditional materials like gold. “Alternatively, reducing the amount of gold in watches, through processes like extruding components, could alleviate some of the cash flow pressure,” he adds.
Meylan predicts that material shifts will become more pronounced in the coming years. “White gold will likely fade in popularity due to its high cost, and we may increasingly see materials like palladium and tantalum replacing it,” he says. “As scarcity rises, gold watches could become as expensive as platinum models.”
While alternative metals may offer solutions for some, Seddiqi remains skeptical. “Gold buyers will continue to purchase gold watches, regardless of the availability of alternatives,” he says. “Their decision-making is rarely swayed by other options.”
Another potential outcome of rising gold prices could be a spike in the prices of pre-owned watches. However, Charles Tian, founder of WatchCharts, a pre-owned market tracker, argues that the secondary market has yet to see a major impact from gold’s price surge. “Even with a 40% increase in gold prices, it likely translates to only a 10-15% increase in the overall value of a watch,” Tian notes.
Despite this, gold watches—particularly those from Rolex—have outperformed steel models in recent years, with their median value increasing by 32.3%, compared to 26.4% for steel. Yet, with the cooling of the secondary market since the pandemic-induced investment surge, many buyers are currently less focused on gold watches.
As the luxury watch industry navigates the challenges posed by soaring gold prices, the focus is shifting toward balancing material costs, market demands, and consumer price sensitivity. The next few months may prove pivotal in determining how these brands adapt to an increasingly volatile market.
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