Over the past decade, the economic value of gold has surged dramatically, showing a steady increase that has, at times, reached dizzying heights. What are the underlying reasons for this phenomenon?

In this article, we’ll explore why the price of gold has skyrocketed and the potential consequences of such high prices, not only for the jewelry industry but also for the technology sector.

Increased Demand for Safe-Haven Assets

The last ten years have been marked by profound global economic instability, leading to a growing demand for safe-haven assets. These assets are considered to have intrinsic value, remaining stable even during periods of economic turmoil or rising inflation.

Gold is the quintessential safe-haven asset. While investing in gold may not yield high returns, it is advisable for portfolio diversification, especially for those looking to shield themselves from extreme events.

Other safe-haven assets include government bonds from financially stable countries, like German Bunds—medium- to long-term government bonds issued by Germany, with maturities ranging from 10 to 30 years. In Europe, they serve as a benchmark for the yields of government bonds from other countries.

Investments in jewelry, watches, artworks, or real estate can also be considered safe havens. Typically, artworks or properties can appreciate over time, just like jewelry or luxury handbags.

Rising Inflation and Demand for Gold in Technology and Manufacturing

In 2013, the price of gold hovered around $1,200 per ounce, but by 2023 it surpassed $1,900, reaching peaks close to $2,000. As of September 30, 2024, the price for an ounce of gold stands at €2,379.62. This means that in the last decade, gold prices have essentially doubled.

Inflation is rising, driving up prices and decreasing purchasing power in direct proportion to gold demand. The technology and manufacturing sectors are particularly reliant on gold due to its unique properties: high electrical conductivity, corrosion resistance, and ease of processing.

So, which sectors are experiencing increased demand for gold, also known as Aurum by the Romans?

Technology and Electronics

Gold is widely used in advanced electronic devices such as smartphones, computers, semiconductors, and automotive components. Its properties are essential for producing microprocessors and connectors, where conductivity and durability are crucial.

The boom in digital technologies and the expansion of the telecommunications sector have generated unprecedented demand for gold, helping to keep prices high.

Gold’s unique physical properties—electrical conductivity, corrosion resistance, and malleability—are why it is extensively utilized across various technological and industrial sectors.

In electronics, gold is vital for components like microprocessors, connectors, and communication devices.

The rising costs have led to increased production expenses, prompting tech companies to seek more cost-effective solutions or reduce gold usage wherever possible, all while maintaining quality and performance.

Advanced Manufacturing

In the manufacturing industry, gold finds applications in niche sectors such as aerospace and medical biotechnology.

Thanks to its chemical stability and thermal resistance, many precision technological components and medical equipment are made from gold. Thus, gold is becoming increasingly irreplaceable in certain production processes.

In medicine, gold is used in advanced diagnostic equipment and medical treatments. Rising prices directly impact the costs of these devices, influencing treatment and care expenses.

Inflation and Production Cost Pressures

The continuous rise in gold prices has also generated pressure on production costs in technology and manufacturing sectors.

Companies that use this precious metal must contend with rising raw material costs, which are reflected in the prices of finished products. Consider industries where substituting gold with other materials is simply not feasible without compromising performance and reliability.

From jewelry to technology, the price of gold affects both consumers and producers.

Consequences for the Jewelry Sector

For now, gold remains the key element in producing luxury items and ornaments.

#1 Rising Retail Prices

The increase in retail prices is the latest consequence: gold jewelry has become increasingly expensive for consumers. Elaborate, heavy pieces are giving way to lighter jewelry, which is now more in demand in a mass market that is willing to spend but can only afford up to a certain limit.

This shift has resulted in a declining demand for more expensive products, particularly among consumers with lower purchasing power.

Jewelry stores have adapted by offering alternatives such as gold-plated jewelry or pieces made with less precious alloys (585, 375, which are 14 and 9 carats, respectively) that are more accessible.

#2 Strengthening of the Second-Hand Market

With the rising cost of gold, the second-hand market is experiencing significant growth.

More consumers are choosing to sell old gold jewelry or purchase pre-owned pieces, promoting recycling and reuse of precious metals. Companies selling used and refurbished gold jewelry directly to consumers are emerging.

#3 Lighter Designs

The goal is straightforward: maintain affordable costs. However, creating lightweight yet durable jewelry using less gold is an ongoing challenge that should not compromise design or beauty, which are essential for any piece of jewelry. It’s not a trivial issue, we assure you.

That’s why Quadrifoglio has invested in machinery capable of producing lightweight and ultra-lightweight gold components while ensuring product durability. From gold beads to component manufacturing, we support those manufacturers aiming to produce competitive jewelry in the market.

Will the Future Be Golden?

In the next ten years, gold prices are likely to continue rising due to several factors:

• Geopolitical and Economic Instability: Global uncertainty, conflicts, and economic tensions are expected to keep demand for safe-haven assets like gold high.
• Increased Technological Demand: As technology progresses and sectors like artificial intelligence, aerospace, and renewable energy expand, the demand for gold for technological purposes will continue to grow.
• Changes in Jewelry: We may witness a design revolution, with gold becoming an even more exclusive metal and, in some cases, being replaced by synthetic or less valuable materials.
• Financial Investments: Gold will remain a crucial component in investors’ portfolios, especially amid economic uncertainty.

In ten years, gold prices could exceed $3,000 per ounce, further shifting dynamics in the sectors that rely on it.

The jewelry market will become increasingly exclusive, while technology companies will need to find innovative solutions to manage the rising costs associated with this precious metal.

The increase in prices profoundly influences daily life, affecting consumer choices and shaping global market dynamics.

How to Navigate an Increasingly Complex Market?

In light of the above, Quadrifoglio has developed three exclusive lines of gold jewelry tailored to meet the needs of a slowly but steadily evolving market.

Sfera, Poliedrica, and Rosario are our brand-new creations.

These pieces are not only lightweight and eye-catching, making them accessible, but they also stand out for their attractive design and top-quality craftsmanship. Their durability is made possible by over 50 years of experience in the jewelry industry.

Innovation, attention to detail, and artisanal skills from the best tradition combine in these three unique collections, available for purchase in stock with a minimum of six pieces.