Jewellers in Shanghai are concerned rising precious metals prices will take the shine off gold and platinum and drive consumers away, but they still raised prices of the metals on May 2, 2006 and again on May 11, 2006 for the seventh increase to cover surging raw material costs. On May 11, 2006 the base retail price of 24-carat gold jewellry climbed to 214 yuan ($26.75) a gram, up eight yuan from the hike on May 2, 2006. High purity platinum prices jumped to 376 yuan a gram from 342 yuan a gram, said the Shanghai Gold and Jewellry Trade Association.

Gold jewellry prices have gained 33.8% so far while prices of platinum jewellry have risen 22.9% in the same period. Buyers will find local jewellry shops like Shanghai Lao Miao Jewellry and Shanghai Laofengxiang selling the yellow metal even at 218 yuan a gram, as the association allows a 3% point range cap on the set rates. Consumers are not the only group hurt by the rising prices. Some jewellers are concerned about falling consumption volume.

Jewellers are also cautious about buying more materials for jewellry processing on fears they will lose money if the material prices fall. That will lead to a negative cycle -- jewellers slow to sell new sets, consumers will stop buying, and sales may drop further. In the city, 24-carat gold and platinum jewellry are sold by weight plus a processing fee.