Soaring gold prices spell payday for some, but economic uncertainty for all

Now might be a golden opportunity to empty out the jewelry box.

A palmful of gold necklaces, rings or other jewelry could fetch about $10,000 at precious metals dealers as gold’s price-per-ounce continues its record-breaking rise.

“People cry, like shaking — they can’t believe the amount they’re getting,” said Jenn Heitzenroder, manager of Treasure Hunt in Pittsburgh’s Waterworks shopping center.

As of Wednesday afternoon, the market price for a troy ounce of gold hovered around $4,060, just one day after reaching $4,000 for the first time. A troy ounce is the standard unit of weight for precious metals, and equals about 1.1 regular ounces.

The more than 50% rise in gold prices this year represents immense opportunity for buyers and sellers of bullion — and could inspire ordinary investors to jump into a new market — but some say it’s also a worrisome sign.

Economists and financial experts attribute skyrocketing gold prices to a web of factors — inflation, the federal debt, geopolitical instability and more.

When uncertainty strikes, they say, investors often look to gold because of its historic stability.

At such a high price, precious metals dealers are seeing an increase in customers looking to sell gold pieces that, in many cases, they’ve stashed away for decades.

“We’re seeing a lot more people who just have a whole safe full of coins who are like, it’s time,” said Brian Nicklaus, who runs a jewelry shop inside the Pawn and Jewelry Exchange in Greensburg.

Investing in gold, on the other hand, is fast becoming the realm of wealthy individuals, institutional investors and central banks, according to James Cordier, a precious metals expert and head trader at Alternative Options. He expects them to keep buying.

“For the average investor, is now a good time to buy gold?” Cordier said. “Hell no.”

Price outlook

Gold’s remarkable surge started in late 2023, at about $2,000 per troy ounce.

In March, that price passed $3,000. August kicked off an even steeper ascent that led to a troy ounce hitting the $4,000 mark on Tuesday.

These rising prices are a reflection of global economic anxiety, according to John Canavan, lead U.S. analyst at Oxford Economics. But the record rally was also enabled by waning faith in America as a financial leader.

The value of the U.S. dollar against other currencies fell about 11% in the first half of this year, its biggest decline in 50 years. And as the country’s debt rises unchecked, Canavan noted, traditional safe-haven assets like Treasury bonds don’t seem so comforting.

That leaves gold as the last refuge.

But Canavan also believes that once the $4,000 level for gold appeared within reach, investors got excited and supercharged prices in pursuit of that milestone.

“The new thing here is people who had really been on the sidelines finally throwing in the towel and saying, ‘We think we need to get in here,’” Canavan said.

So far, there’s little indication prices will come back down.

Cordier, the precious metals expert, estimated gold will reach $4,500 per troy ounce in the first half of next year.

That could mean a roughly $500 profit on a single gold coin.

But like any investment, shifting market conditions can turn sure bets into regrets.

“For a brand new investor to plunk down $4,000 to, maybe, make $500, it doesn’t sound like a great risk/reward,” Cordier said. “It’s not going to change anyone’s financial future or freedom.”

Market impacts

Plenty of people have cause for celebration when gold prices rise.

That’s not always the case for businesses trying to sell gold items.

“Nobody wants to pay $5,000 for a necklace,” Treasure Hunt’s Heitzenroder said. “They’ll sell it for that.”

At Orr’s Jewelers, with locations in Sewickley and Pittsburgh’s Squirrel Hill neighborhood, costs for gold pieces are starting to rise.

“We’re absorbing some, the designers are absorbing some and we’re trying to pass along as little as possible to the client,” said Aliza Gordon, co-owner of Orr’s.

Gordon said her company is more insulated from price fluctuations than others because it makes a relatively small proportion of its own jewelry, meaning it doesn’t buy much gold directly.

Luxury brands, which make up most of Orr’s stock, also tend to resist cost hikes better than mid-level brands, according to Gordon.

Nicklaus, of the Greensburg jewelry shop, doesn’t see much benefit in worrying over gold prices.

In his experience, people are mentally prepared to splurge when they set out to buy gold jewelry, usually to celebrate a special occasion.

“It just isn’t changing, no matter what the price of gold has done,” he said.