For jewelers, all that glitters this year isn't necessarily gold.
Big jewelry chains are scrambling to cope with the rising price of bullion while striving to keep their baubles affordable for consumers still cautious in their spending.
Some are cutting back on the amount of gold in their products and turning to less expensive metals from silver to tungsten. Jewelers also are buying precious metals in bulk at fixed prices to hedge the risk of further spikes.
Even so, jewelry prices are likely to rise due to higher material costs. This year, gold prices have risen 22%, settling Wednesday at $1,336.80 a troy ounce, near a record high in nominal terms. Silver is up 52% and platinum is up 12%. A 14 carat gold chain that cost $250 10 years ago now sells for over $1,000, said Brian Ree, co-founder of retailer GoldenMine.com Inc.
"If our costs go up, customers understand prices will go up as well," said Mark Aaron, vice president of investor relations at Tiffany & Co.
