Will Gold Price Volatility Help Traditional Jewelers Like Chow Tai Fook Transform Into Luxury Brands?

After the Spring Festival holiday in February, Xu Yan spent all of her year-end bonus from before the holiday in one go.

She had seen online that the old shop gold was going to increase prices at the end of February. At first, she didn’t think it was a big deal, but then the news of continuous international gold price increases pushed her further. “At the time, I felt gold prices kept hitting new highs, and I kept seeing those ‘buy early, enjoy early’ stories on Xiaohongshu. It made me itch to buy.”

Holding several tens of thousands of yuan in her year-end bonus, Xu Yan decided to buy two pendants she had long desired. She didn’t go to a physical store—although she might have gotten a better price with mall points, she didn’t have time to queue. Fortunately, at the time, the store’s online flagship was running a promotion offering 1000-100 yuan discounts, which was one reason she placed her order quickly. The downside was, unlike in-store pickup, online purchases required waiting. After placing the order, the website showed that most products were pre-sale, with delivery scheduled before March 29.

But soon, Xu Yan’s dissatisfaction with the slow delivery from the brand was overshadowed by her happiness about the price increase. One chain with about 18.6g of gold, she bought it at a 10% discount, paying less than 30,000 yuan. On February 28, the brand adjusted prices, and this chain’s price jumped above 43,000 yuan. Another necklace, weighing less than 20g, originally bought for nearly 31,000 yuan, also increased to over 45,000 yuan after the price hike.

This over 30% price increase made Xu Yan feel she had made a profit. Over the next two weeks, she checked periodically to see if her order had shipped and occasionally urged customer service. Of course, the replies were always the same: “Due to high order volume, we will ship as soon as the product is available.”

In mid-March, Xu Yan finally received her long-awaited necklace, but bad news followed—the international gold price started to decline, heading downward instead of upward.

Gold Prices Fluctuate, Who Are the Big Winners?

On March 23, Black Monday, as the conflict in the Middle East escalated and further dampened investor sentiment, spot gold prices plummeted. That day, after a weekly drop of over 10% to a seven-week low—marking the largest weekly decline since March 1983—gold prices repeatedly broke through five key levels: $4,500, $4,400, $4,300, $4,200, and $4,100 per ounce, with the lowest touching $4,098 per ounce. This wiped out the gains made since the start of the year.

However, over the next two days, gold rebounded strongly. On March 24, at the New York close, spot gold rose 1.47% to $4,472.02 per ounce. COMEX gold futures increased 1.19% to $4,492.30 per ounce.

On the morning of March 25, spot gold continued to rise, breaking through the $4,500 and $4,600 levels consecutively, gaining nearly 3%.

As a result, domestic jewelry brands also raised their prices, with gold prices returning to around 1,400 yuan per gram. On March 25, Chow Tai Fook’s pure gold jewelry was quoted at 1,418 yuan per gram, up 68 yuan from the previous day; Chow Sang Sang and Luk Fook quoted around 1,408 yuan per gram, up 66 yuan.

Amid the wild swings in gold prices, consumers like Xu Yan felt their daily gains and losses fluctuate wildly, while the true big winners confidently stepped into the spotlight.

On March 23, Lao Pu Gold (06181.HK) announced its full-year results ending December 31, 2025. In 2025, Lao Pu Gold’s revenue, including tax, was about 31.4 billion yuan, up 220.3% year-on-year; income was about 27.3 billion yuan, up 221.0%; net profit attributable to owners was 4.868 billion yuan, up 230.5%.

Over the past two years, the global luxury industry has been in a downturn, yet this brand’s popularity has soared, attracting widespread attention. An industry insider told reporters that five years ago, high-end malls in China often saw queues outside Louis Vuitton and Chanel before price increases. But in the past two years, queues have appeared outside Lao Pu Gold stores.

Lao Pu Gold disclosed in its March 23 announcement that its first-quarter 2026 sales are expected to reach 19 to 20 billion yuan, with net profit of 3.6 to 3.8 billion yuan. This means that in the first quarter alone, Lao Pu Gold achieved about 70% of last year’s total revenue.

Aligning with Luxury Brands, Jewelry Stores Need to Transform

Gold trading in China is a traditional and ancient business.

Gold prices are transparent and open. Over many years, merchants have tried various tricks to make small profits and increase sales, with limited premiums.

Today, among all jewelry brands, Lao Pu is clearly a leader. All its products are “fixed price,” which allows for much higher profit margins. According to financial reports, Lao Pu’s gross profit margin usually exceeds 40%, while competitors like Chow Tai Fook, Chow Sang Sang, and Chao Hongji typically hover between 20% and 30%. Due to significant gold price increases in 2025, Lao Pu’s gross margin slightly declined to 37.6% compared to 2024. However, in the latest announcement, the company stated that after the third price adjustment in October 2025, gross margin rebounded to over 40%.

Similar to luxury brands’ pricing strategies, Lao Pu Gold has maintained a pattern of raising prices two or more times a year in recent years. In April 2025, during the company’s earnings presentation, founder Xu Gaoming said, “If selling gold can’t beat selling leather goods, we need to reflect.” This also reflects Lao Pu’s self-positioning to some extent.

According to recent research by Frost & Sullivan, the overlap rate of consumers between Lao Pu Gold and top international luxury brands like Louis Vuitton, Hermès, Cartier, and Bulgari increased from 77.3% in July 2025 to 82.4%.

Market opinions are not all praise. Some skeptics point out that senior luxury industry insiders, like Zhou Ting, president of the Key Customer Research Institute, believe that over the past year, multiple brands have repeatedly raised prices sharply. Their core strategy is very clear: to leap out of the “gold seller” identity and transition into legitimate luxury brands, aiming to match and surpass the premium levels of top European and American luxury brands through continuous price increases.

Price hikes are understandable if the market accepts them. But Zhou Ting also pointed out that true top luxury brands rely on a century of history, irreplaceable brand culture and spirit, proprietary craftsmanship, deep social status binding, and strict scarcity control—ultimately achieving independent pricing power beyond raw material costs.

Xu Yan previously bought many luxury jewelry pieces. She said that her Cartier and Boucheron jewelry were mostly 18K gold, yet sold at prices several times higher than gold. Tiffany’s silver jewelry also sold for much more than gold. But ten years ago, or even five years ago, gold prices weren’t rising so sharply. “Back then, I didn’t have much concept and didn’t care that much. It was mostly about face—buying a brand name.”

Jenny, who has worked for several luxury groups, believes that when people buy big international brands, they don’t care about the raw materials behind them—they buy the brand’s value. But she also admits that domestic jewelry brands that have emerged in recent years are indeed skilled in craftsmanship, waiting for time to prove themselves. “Many people around me buy them, so I followed suit.”

However, rising challengers have caught the attention of old European brands. Richemont owns brands like Cartier and Van Cleef & Arpels. Last year, Richemont’s China revenue fell 23%. The group’s CEO mentioned Lao Pu Gold, saying it “drives the desire and vitality of the jewelry market.” LVMH’s CEO also visited Lao Pu Gold during his trip to China last year.

Lao Pu’s rapid rise in recent years has attracted a lot of attention. After an initial period of surprise, some companies have started to benchmark Lao Pu and voice their own strategies.

In early March this year, Chow Tai Fook announced that Xie Dinghong would serve as the group’s global creative director. He previously worked at Burberry, Canada Goose, and other brands, and before joining Chow Tai Fook, he was the creative director for Hermès China, the first to be based outside Paris.

This move is seen as a signal that Chow Tai Fook plans to transform into a luxury brand.

In its 2025 financial report, Chow Tai Fook reported a 105.5% year-on-year surge in sales of its gold products. The new flagship gold series—the Chow Tai Fook Chuan Fu series and the Palace series—achieved about HKD 4 billion in sales, exceeding the annual target.

Companies that continue to sell gold by the gram will still exist. In the jewelry sector, whether Chinese companies can break the “traditional gold retailer” label and push toward luxury branding for higher premiums depends on telling compelling brand stories. Those who tell good stories will have higher profit margins; brand strength will be the focus of the next round of competition.

(This article from Yicai)