The price of gold is once again making headlines, but its impact extends well beyond investors watching financial markets.
For anyone buying fine jewellery, expensive gold is gradually changing what jewellers make, what retailers stock and, potentially, the choices customers make.
Gold has been trading close to historic highs, making the precious metal contained in an 18ct gold ring considerably more valuable than it was only a few years ago. For jewellery buyers, the significance becomes clearer when we consider what actually goes into a ring.Gold is no longer the inexpensive part of a diamond ring
When somebody buys a diamond engagement ring, attention naturally focuses on the diamond.
Carat weight, colour, clarity, cut and whether the diamond is Natural or Lab Grown tend to dominate the discussion. The precious metal holding that diamond can almost become an afterthought.
At today’s elevated gold prices, that is increasingly difficult to justify.
An 18ct gold ring is 75% pure gold, represented by the familiar UK hallmark fineness number 750. A substantial engagement ring can therefore contain a meaningful amount of precious metal before we consider the diamond, manufacturing, setting, polishing, hallmarking, distribution and VAT.
That does not mean the retail price of a ring can be calculated simply by weighing it and looking up the day’s gold price. Jewellery is a manufactured product, not a piece of bullion.
It does mean that the raw material has become a much more significant part of the equation.Could rings become lighter?
This is where high gold prices can influence jewellery design.
Manufacturers have several ways of responding when a raw material becomes substantially more expensive. They can increase prices, accept lower margins, change the product or use less of the material.
In jewellery, the last option requires care.
There is nothing inherently wrong with a refined, delicate ring. Some designs are intended to be slender and elegant.
There is, however, an important difference between a ring being delicately designed and simply being made unnecessarily light to reduce its gold content.
Engagement and wedding rings are expected to withstand years of wear. The thickness of a shank, strength around a setting and amount of metal supporting a diamond all contribute to durability.
A small saving achieved by reducing metal weight can be a poor bargain if the result is a ring more vulnerable to distortion or wear.
For buyers comparing apparently similar rings online, construction and substance may therefore deserve more attention than they traditionally receive.Why 18ct gold remains important
Britain has a long tradition of 9ct gold jewellery, and 375 — meaning 37.5% pure gold — is a legally recognised UK gold standard.
It has obvious advantages. Less pure gold means a lower raw-material cost, and the additional alloying metals can produce a hard, practical material.
For fine diamond jewellery, however, 18ct gold occupies a particularly attractive middle ground.
At 75% gold, it retains the richness and intrinsic precious-metal content people expect from fine jewellery while remaining suitable for rings intended for regular wear.
Its colour can also be modified through alloying.
Yellow gold preserves the warmth traditionally associated with gold. White gold provides a cooler appearance that works particularly well with colourless diamonds, while rose gold obtains its distinctive tone through a greater proportion of copper in the alloy.
High gold prices may make 18ct jewellery more expensive to manufacture, but they also remind us why the metal is regarded as precious in the first place.What about platinum?
Interestingly, expensive gold can also alter the relationship between gold and platinum.
Platinum has historically carried a reputation for being the more expensive choice, and many customers still assume that a platinum engagement ring must cost considerably more than the equivalent ring in 18ct gold.
Raw-metal prices no longer make that assumption reliable.
Direct comparisons are complicated because platinum jewellery is generally much denser and normally contains a very high proportion of pure platinum. A platinum ring can consequently require more precious metal by weight than the same design made in gold.
Nevertheless, the old rule that “platinum is expensive and gold is cheaper” is no longer a particularly useful way to choose between them.
The better question is which metal best suits the ring, the wearer and the budget.Lab Grown diamonds create an interesting reversal
There is another unusual consequence of today’s market.
While gold has become dramatically more expensive, Lab Grown diamond prices have moved in the opposite direction over recent years.
That creates combinations that would once have seemed improbable.
In some Lab Grown diamond jewellery, the precious-metal mount now represents a much more substantial proportion of the manufacturing cost than customers might expect.
It also means buyers can make different decisions about where to allocate their budget.
Someone choosing an engagement ring may decide to put more money into a substantial, well-made 18ct gold or platinum setting while selecting a Lab Grown centre diamond that provides greater size for the available budget.
Another customer may prefer a smaller Natural diamond because natural origin and rarity matter more to them.
Both approaches are perfectly rational.Hallmarking becomes even more valuable
As precious-metal values rise, knowing what you are actually buying becomes increasingly important.
The British hallmarking system provides independent confirmation of precious-metal fineness. An 18ct gold article carries the 750 fineness mark; 9ct gold carries 375.
That small mark has considerable significance.
A description saying “gold”, “gold tone” or “gold coloured” is not the same thing as an item being manufactured from hallmarked gold.
For a relatively inexpensive fashion accessory the distinction may be obvious. With fine jewellery costing hundreds or thousands of pounds, it is fundamental.
The higher the value of the precious metal, the more meaningful that assurance becomes.Should you wait for gold prices to fall?
Trying to time a jewellery purchase according to commodity markets is rarely sensible.
Gold prices can rise and fall, and major economic and political developments can move them surprisingly quickly. The next significant market influence may come from interest rates, currencies, central-bank demand or an event nobody currently anticipates.
A ring is also not priced like an investment gold bar.
The finished price includes the diamond or gemstones, skilled manufacturing, setting, finishing, hallmarking, distribution, retailer costs and tax. A modest movement in the gold price therefore does not translate into an identical percentage movement in the retail price of a piece of jewellery.
For an engagement ring or anniversary present, postponing the purchase in the hope of correctly predicting the gold market may achieve very little.What matters is what you receive for your money
The more useful response to high gold prices is to become a better-informed jewellery buyer.
Look beyond carat weight when comparing diamond rings. Consider the quality and substance of the mount, the precious metal being used, the construction of the setting and whether the entire piece represents good value.
At Malcolm Cooper Jewellery, we think that distinction matters.
Fine jewellery should not simply look impressive in a photograph on the day it is purchased. An engagement ring, wedding ring or eternity ring is expected to be worn for years and potentially passed to another generation.
Gold’s extraordinary rise has made the raw material considerably more expensive.
It should not make good jewellery less well made.
If anything, when precious metal costs this much, there is an even stronger argument for using it properly.