NEW YORK (AP) -- With the price of gold reaching levels not seen in 27 years, independent and family jewelry retailers are the first to feel the pinch as the crucial holiday season begins.

Gold, platinum, silver and diamond costs have been rising for a number of years. But over the past three months alone, gold prices surged about $200 to $850 an ounce as a weak dollar, record high oil prices and concerns about the economy have made the precious metal an attractive, stable investment. Volatility has also increased, with swings of up to $20 and $30 a day, causing more headaches for retailers.

Meanwhile, platinum -- a popular wedding- and engagement-band choice -- also is at near-record high prices.

Many smaller retailers have already had to raise prices because of the surge in metal costs.

"Am I worried, yeah absolutely," said Benjamin S. Sorkin, owner of Ben Sorkin Jewelers in Philadelphia. "What I'm in is a luxury business, so when people cut back, the first thing to suffer would be that."

Sorkin plans to push items such as pearls and gemstones. Stainless steel and silver are cheaper alternatives, he added.

New York jeweler Tiffany & Co. and large retailers which sell jewelry such as department stores and Wal-Mart Stores Inc. are insulated from the rising prices near-term because they order products up to a year in advance and keep more in stock than smaller retailers.

"It's one of the longest cycles of production, stores are ordering now for a year in advance for delivery," said Marshal Cohen, chief industry expert at market-research firm NPD Group Inc. "A 10 percent increase in the price of jewelry in some of the department stores won't show up until next fall."

But for smaller retailers the effect is more immediate. Bill Collins, president of Collins Family Jewelers in San Diego, said the price surge directly affects the cost of some jewelry he sells.

"While we don't raise our prices on items in the cases, when items are reordered, they're at a much higher price," he said.

A gold necklace in stock that he sells for $100 could cost shoppers about $130 to $145 after he reorders it, due to the higher price of gold, he said.

Bigger retailers are more likely to feel the effect of higher prices via accounting for their inventory. Analysts say Tiffany will face higher "Last in, First Out," or "LIFO" inventory charges. This accounting method assumes the assets produced or acquired last are the ones that are used, sold or disposed of first.

"LIFO charges have been quite significant," over the past several years, as commodity prices have risen, said Pali Research analyst Stacey Widlitz.

For the six months ended July 31, Tiffany incurred LIFO expenses of $12.4 million, up from $9.5 million a year earlier.

Prices at Tiffany reflect more than the rising cost of metals. Tiffany's vice president of investor relations, Mark Aaron, said the cost of labor and design also are big factors in the pricing of its jewelry.

"Tiffany raises prices if it needs to, as the rest of the industry does," he said. "But at least for Tiffany, labor is a meaningful part of the price. A 20 percent increase in gold does not equal a 20 percent jump in retail prices."

Aaron explained that while retail pricing could be affected by higher metals costs, Tiffany's customers won't see the sharp swings in price that buyers of simpler gold chains or bracelets may encounter.

At Fuenfer Jewelers in upscale Chicago suburb Wilmette, Ill., owner Norman Fuenfer said he expects some people will still buy gold even if it doubles in price. But if it keeps going up, things could get "very interesting" for the industry.

Fuenfer has already raised the price of some items, such as gold chains, and said he has seen sales volume fall over the past several months, although sales are still higher year-over-year.

"I'm concerned, but I'm always going to sell something. If gold prices go up I'll sell silver or palladium," he said. "Business will go on.

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