Black Friday surprise: gold price could cause sticker shock
The gold price is hitting record highs almost every day, reaching $1,174 an ounce Tuesday morning. A gold chain that cost $300 five years ago could go for $900 on Black Friday.
When the wise men visited baby Jesus, they brought gifts: gold, frankincense, and myrrh. Today, they might have held off on the gold, because gold prices have hit record highs almost every day. On Tuesday morning, it reached $1,174 per ounce.
Indeed, lots of Americans may be in for some sticker shock if they're buying jewelry as holiday gifts. The price of some bling has doubled so far this year. Couples who are making the trip to the altar will find that even a simple gold wedding band costs about 20 percent more than a year ago. As for gold watches – you might forget about it.
The sticker shock hit Dallas resident Victoria Snee last weekend when she was shopping for rings, bracelets, and necklaces at an outlet store. “I was stunned how expensive the pieces were,” says Ms. Snee, a radio co-host and personality. “I was familiar with some of the jewelry and knew the ballpark price, and they are not the same price anymore.”
The cost has been a turnoff to many consumers. Global demand for jewelry is down 30 percent compared with a year ago, according to a recent report from the World Gold Council, which promotes the metal.
A key reason for the rising price of gold, say gold analysts, is the falling US dollar, which is off 12.2 percent against major foreign currencies since March. The dollar was stronger during the financial crisis of the past two years as investors moved into US Treasury bills.
“One of the explanations is that investors are unwinding those purchases and going back into riskier assets,” says Axel Merk, president of the Merk Mutual Funds in Palo Alto, Calif., which invests in strong currencies and gold.