on top of that, they created their own gold alloy for it. One that allowed them to use less gold at the same karat weight! For that, you paid a premium. Genius.
The melt value of the gold was well under $3000, for a $17000 watch. Even it it had been solid 24k 99.9 fine (I believe it was 14k gold), it would have been a small fraction of the cost, and a low volume item to boot. I doubt the custom alloy contributed significantly to their margin.
IIRC most gold watches are 12-14k for durability.