Luxury watchmakers are grappling with rising production costs after a sharp increase in gold prices over the past year, putting pressure on margins and inventories across the sector.
Gold, which traded at around $2,300 an ounce a year ago, is now hovering near $3,300, marking a 40% surge. With continued market volatility, analysts see little chance of a near-term correction, further complicating procurement strategies for watch brands heavily reliant on the precious metal.
According to the Federation of the Swiss Watch Industry, watches made from precious metals—including platinum and gold—accounted for nearly 40% of Swiss watch exports by value last year, despite representing just 2.7% of total volume. Gold watches, in particular, play an outsized role in the revenue of luxury brands.
In response to rising input costs, Rolex, the industry’s dominant player, has already raised prices by 8% on its gold models at the start of the year. This follows two price hikes in 2024, with another increase reportedly planned for the coming month.
Other brands have opted to reduce inventories, scaling back offerings of gold models to manage exposure. Data from Geneva-based Digital Luxury Group (DLG) reveals that Cartier cut its U.S. online inventory by 63.8% in the first three weeks of April. As a result, the average price of a Cartier watch fell by 30.4%, largely due to the withdrawal of higher-end gold timepieces.
DLG also reported a pronounced wave of price hikes coinciding with U.S. tariff-related announcements in early April. The most significant increases occurred in models priced over $100,000, which saw prices rise 17.5%. Rose gold watches were the most affected, with prices climbing 23.5% amid a 16.4% drop in inventory—a clear sign of tightening supply and strategic repositioning.
Independent watchmakers are also adjusting. Edouard Meylan, CEO of Swiss luxury brand H. Moser & Cie, said his company is relying on gold purchased last year and is now avoiding new orders unless essential. Despite the pricing pressure, demand for rose gold models remains strong. “Over the past few weeks, we sold a lot of gold watches to people wanting to invest,” Meylan said.
As gold continues to rise, luxury watchmakers are navigating a delicate balance between maintaining product prestige and managing material costs, with some leaning into investor demand to justify higher prices.
