Diamond Prices are Down as People Spend More on Travel and Food

In 2023, rough diamond prices have experienced a notable dip, marking their lowest point in a year. This decline is attributed to shifting consumer trends in the post-pandemic era, with many individuals showing a preference for experiences over luxury goods.

According to data from the Zimnisky Global Rough Diamond Index, the current prices reflect a substantial decrease, driven primarily by reduced sales at jewellery counters. During the pandemic, as individuals curtailed spending on dining and travel, disposable income was redirected toward discretionary spending.

Paul Zimnisky, a global diamond analyst, pointed out that the trend emerged as people sought experiences over material possessions. Factors such as dining out, travelling, and investing in experiences have taken precedence over luxury goods, including diamonds.

Experts emphasize that the diamond market is heavily reliant on consumer demand. The preferences of shoppers for diamond jewellery directly influence the prices of rough diamonds and, to some extent, retail prices. Retailers play a crucial role in stimulating consumer demand through substantial advertising investments.

The recent decline in rough diamond prices follows two consecutive record-breaking years for rough diamond sales in 2021 and 2022, when demand for natural diamond jewellery reached unprecedented levels. According to Zimnisky, the market had witnessed a sharp upward trajectory, and the current decline represents a natural correction.

However, it is essential to note that a decrease in rough diamond prices does not necessarily translate to lower prices for consumers at jewellery stores. Retailers typically do not make immediate adjustments to their in-store prices based on fluctuations in the rough diamond market. Retail price points remain relatively stable in the short term, irrespective of whether raw diamond materials become more affordable or expensive.

Edahn Golan, an independent diamond analyst, revealed that despite the falling prices of rough diamonds, purchasing a one-carat round diamond from a jeweller is currently around 3% more expensive than it was in January 2020. Retailers are known for setting price points and diligently guarding their profit margins.

Industry analysts anticipate a resurgence in retail sales during the upcoming winter holidays and early 2024, which traditionally serve as peak engagement and gifting seasons. While this may contribute to a temporary uptick in rough diamond prices, the overall outlook suggests a year-over-year decline in holiday season sales, according to David Johnson, a spokesperson for De Beers, one of the world’s largest diamond companies.

Zimnisky predicts a market softening in 2023 compared to the peaks observed in 2021 and 2022 but remains optimistic about economic indicators in the United States. Strong employment and robust stock market performance provide a favourable backdrop for a gradual recovery in rough diamond prices in 2024.