Higher gold prices mean higher jewelry prices

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You might want to hurry up and pop the question.As prices for both gold and platinum hit record highs, those increases are starting to work their way into jewelry stores. More brides and grooms may be forced to make trade-offs between diamonds, metals and the honeymoon budget.Even now, one of the nation's largest specialty jewelry chains has announced it may raise prices after Valentine's Day. The parent of Kay Jewelers and Jared the Gallery of Jewelry is trying to figure out how to balance rising commodity costs with a slow retail environment.Meanwhile, jewelers have found themselves explaining more often how the highest gold prices in 20 years have wreaked a bit of havoc in their display cases.The shock may come when someone likes a gold band that is in stock but needs to order a different size, said John Henne, of Henne Jewelers in Pittsburgh. The one that the store purchased awhile ago might have been priced at $400, while the manufacturer's price has risen to $700."To tell a client this is a lot more expensive than we thought is difficult," said Henne. With 5,000 items in the store, he said it can be hard to know which merchandise is affected by the rise in gold.At Orr's Jewelers in Pittsburgh, prices on some of the most intricate pieces have risen 10 percent to 25 percent under the combined forces of rising gold prices and the falling dollar, according to owner David Gordon.Customers have taken the news rather well, he said, since many are aware of what's been going on in the markets. "They're still asking for these brands."But he's also been working to give them alternatives. In November, the company began carrying Ippolita, a line that boasts Italian design but is made in the United States. That, at least, minimizes the currency issues, Gordon said.Gold prices started creeping up a couple of years ago and have really spiked since the fall, said Henne, who checks the market every morning so he can alert his staff to the latest developments.In many cases, customers have been cushioned from the impact because jewelers already had inventory on hand. It's not just gold that's been going up, either. Diamonds and platinum also cost more."These (increases) have not been fully passed on to consumers," according to the most recent earnings release from Signet Group PLC, the British owner of the Kay and Jared chains. "This cumulative effect of higher commodity costs does mean that Signet anticipates realigning prices in 2008." The company indicated it might take a while for its competitors to respond.Henne said he was bracing for a well-known Swiss watchmaker to put through a price hike soon. "They haven't changed the price on a gold Rolex in 18 months."Rather than scaring customers off, price increases may have the effect of convincing many that now is the time to buy, said Pam Danziger, president of the retail consulting firm Unity Marketing in Stevens, Pa. She said some may say: "If it's $700 now, what is it going to be next year? I'd better buy it now."In addition, she said, jewelry is unusual among luxury goods because consumers tend to perceive it as having some lasting value, although neither she nor the retailers advised buying pieces as an investment strategy.One area that some shoppers have been making compromises is in the bridal department, the retailers said. Although both Orr's and Henne said platinum and white gold remain the most popular metals at the moment, there are couples who have altered their plans because of the rising costs."We're seeing a few more saying, 'I'm going to put my money in the diamond,' " said Henne. That might mean going with white gold rather than the pricier platinum so that they can buy a better-quality diamond.(Distributed by Scripps Howard News Service, www.scrippsnews.com.)