In The Gift Of The Magi, the watch symbolizes heritage, character, and love.
Heritage: Jim's gold watch has been worn by both his father and grandfather. It is an heirloom watch, passed down to succeeding generations, bound by the ties of family and love.
Character: In the story, Della compares her husband's honorable and dependable character to the priceless, elegant watch. She chooses the platinum fob chain for Jim's Christmas present because it reminds her of the kind of man that he is.
It was a platinum fob chain simple and chaste in design, properly proclaiming its value by substance alone and not by meretricious ornamentation--as all good things should do. It was even worthy of The Watch. As soon as she saw it she knew that it must be Jim's. It was like him. Quietness and value--the description applied to both.
Love: The watch also represents Jim's love for Della. In the story, we read that the couple's income has recently decreased from $30 a week to just $20 a week. Jim has gone without a new overcoat and gloves so that the couple can continue to survive on their meager income. Despite their impoverished circumstances, Jim is willing to give up his treasured watch in order to purchase a Christmas present worthy of his wife.
As we read the story, we realize that Jim has gone to great sacrifice to purchase the expensive, jeweled tortoise-shell combs for Della. To Jim, the gift is a tribute to his wife's physical and inner beauty. The watch represents Jim's industry and dependability. Della states that her husband is never late. We can infer that Jim is also a dependable employee, who is never late to work. His watch allows him to keep his daily promises of love to his wife.