The diamond industry is keenly watching big economies and hope the prices will recover.
In 2023, the prices of rugh diamonds - the raw, unpolished, and uncut stones - dipped as consumer behaviour change in the post-pandemic era. Citing a report by Zimnisky Global Rough Diamond Index, CNN reported that people are shying away from investing in luxury items. The Zimnisky index reports that prices have reached their lowest point in the past year. Diamond prices have adjusted to the changing preferences of consumers who are now prioritising experiences such as dining out and traveling over the acquisition of luxury goods, according to industry analysts.
Paul Zimnisky, a diamond analyst, said that consumers had extra funds for discretionary spending during the pandemic since expenditures on dining and travel was considerably low. "People had surplus funds to allocate to non-essential purchases," he told CNN.
Another diamond analyst Edahn Golan told the outlet that diamonds are a completely consumer-driver market. "Shopper demand for diamond jewellery influences rough diamond prices and, to an extent, retail prices. Retailers stoke consumer demand by pouring hundreds of millions of dollars into advertising," he added.
The fall in prices follow two record-breaking years in rough diamond sales. In 2021 and 2022, demand for natural diamond jewellery was at an all-time high.
Mr Zimnisky called it a correction.
However, a drop in diamond prices does not mean consumers will get cheaper prices in stores. These prices are not adjusted based on the rough market in short term. "Retailers set a price point, and they're fiercely protective of their gross margins," explained Mr Golan.
The retail sales of diamond is expected to finally see a jump during the winter holidays and early 2024. This time period will have several holidays, including Christmas and Valentine's Day.
But David Johnson, a spokesperson for De Beers, one of the largest diamond companies in the world, expects the spike to be small. All the experts are keenly looking at economic indicators in the US and other large markets.