By Leeton Brown
The jewelry industry exemplifies several key macroeconomic trends. These include international supply-chain disruptions, a depreciating dollar, asset speculation, and asymmetric pandemic recovery. The highly competitive and relatively decentralized market consists of manufacturers, wholesalers, and retailers. Low production volume of luxury goods makes the industry particularly responsive to changes in demand. Moreover, around 85% of all American domestic demand is satisfied by international producers, meaning tariff threats on finished jewelry remain high.
One of the most notable asset trends has been gold’s price surge, which reached a year-over-year increase of 67.24% on October 20, 2025. Since the US froze Russian assets on February 28, 2022, central banks have invested heavily into gold, reducing reliance on American treasuries as a default of international trade. From February of 2022 to July of 2025, central banks’ aggregate gold holdings as percentage of international holdings rose from 14% to 24%, while the share of American treasuries declined. This raised the price of gold by 114% from February of 2022 to October 2025. Retail investors have also invested heavily in the asset through gold-holding ETFs.
As gold becomes more popular, the proportion of gold tonnage held in jewelry has fallen. The World Gold Council reported that year-over-year demand for gold jewelry fabrication has fallen 23% with consumption falling 19%. Overall, large jewelry wholesalers haven’t seen hard impacts due to high cross-price elasticity between metals like gold, silver, and platinum. In other words, consumers have easily substituted between these different metals as prices have changed. As a result, gold jewelry manufacturers have been hurt. They suffer from high switching costs, which mean that it is difficult to shift production towards inputs that have seen less price growth. Most notably, the industry’s many small boutique firms often lack the capital needed to take advantage of sophisticated hedging strategies. It is no surprise that we have been seeing both elevated closure and consolidation rates in the industry.
One unexpected good thing has been resilient consumer spending, diverging from traditional indicators that would normally predict slowing consumption. High income consumers through the wealth effects of booming stock and asset markets have continued to spend. In the second quarter of 2025, nearly half of consumer spending came from Americans in the top 10%. The last time this happened was during Reagan’s presidency. This bifurcated economy may allow luxury products to avoid some of the broader decline in consumer spending, assuming wealthy clientele keep up with these consumption levels.
With these looming domestic consumer risks, expansion into foreign markets has become enticing. Emerging markets continue to captivate as their global share in the jewelry market grows. India and China now surpass the US as the world’s largest jewelry markets. India has become particularly important, accounting for roughly two-thirds of the global gemstone trade. Jewelry is able to operate as a store of value due to cultural norms such as dowries. Access to these markets would allow firms to tap into rapidly growing international demand. However, significant cultural and stylistic differences make this expansion difficult. For example, Indian jewelry features heavier ornamentation as well as higher average gold purity (often 22K or 20K compared with 14K or 18K in the US). Ultimately, increasing global competition threatens American vendors and manufacturers, especially as e-commerce wholesalers gain market share.
Despite these challenges, the American jewelry market holds steady. Firms have perhaps demonstrated understated adaptability to these various shocks. All we know for certain is that they must navigate an uncertain market, and new winners will soon be crowned in an industry that has long endured for centuries.