Gold, which has soared to record levels in the past year, hit a new milestone Thursday, rising to $1,000 an ounce for the first time in futures trading, The Associated Press reports.
The price of gold has jumped nearly 20 percent since the start of the year after rising nearly 32 percent in 2007. The huge advance is mainly the result of a weaker dollar and record-high crude oil prices. The dollar fell below 100 yen Thursday for the first time in 12 years and hit another new low against the euro, while oil traded above $110 a barrel Thursday.
Lower interest rates—and the prospect of more cuts—bringing the dollar’s value down makes dollar-based commodities like gold cheaper for foreign buyers. The weak currency has also made gold more attractive because the metal is a hedge against inflation.
After topping $1,001 on the New York Mercantile Exchange, gold for April delivery fell back to $993.80 an ounce on Thursday, the AP reports.
Tiffany spokesman Mark L. Aaron told the AP that while there is not a direct correlation between the rising price of gold and the cost of its gold jewelry—the labor that goes into a piece is an important factor—Tiffany does adjust prices based on the cost of precious metals. If gold keeps rising, a price increase this year would be a “fair assumption,” he said.
Independent jewelry stores, meanwhile, order products closer to when they appear on the shelves. Patrick J. Murphy, owner of Murphy Jewelry in Pottsville, Pa., said he doesn’t raise the price of gold jewelry he has in stock but he must when he reorders pieces.
For example, he told the AP, an 18-inch gold chain in stock has a retail price of $189.95, but if he reordered the chain at the same length, weight and style, it would be priced at $346.
“That’s been our challenge,” he told the AP.
When the makers of branded jewelry and accessories raise their prices, he has to pass the increase on to customers. He cited a recent price increase by Rolex as one example.
Patti Warshauer, owner of Main Street Goldworks in Half Moon Bay, Calif., said consumers are buying less, but it’s not the price of gold that’s getting to them—it is all the other financial pressures they’re contending with.
“Discretionary income is much more affected by the price of other things, gas and things like that,” she told the AP. “They’re still buying gold if they need it, if it’s what they like.”
Whether consumers are buying gold or selling it, Murphy, a jeweler for 30 years, said he’s amazed the price has jumped so high. He remembers when gold was just $35 an ounce.
“I didn’t think we would ever be talking about $1,000 an ounce,” he told the AP. “It’s crazy.”
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