In 2023, the cost of rough diamonds—the uncut, unpolished, and unrefined stones—has decreased as a result of the post-pandemic consumer backlash against luxury goods. The Zimnisky Global Rough Diamond Index indicates that prices are at their lowest point in a year. According to industry observers, the drop is a result of falling jewellery counter sales.
During the epidemic, consumers spent less on dining out and travel, so “people had excess money to spend on discretionary purchases,” according to Paul Zimnisky, a worldwide diamond expert.
Due to people favouring services over jewellery, diamond prices have changed. Analysts claim that instead of spending money on opulent objects, people are dining out, travelling, and enjoying experiences.
According to independent diamond expert Edahn Golan, the market for diamonds is entirely influenced by consumers. Retail prices and, to some extent, rough diamond prices are influenced by consumer demand for diamond jewellery. By investing hundreds of millions of dollars in advertising, retailers fuel consumer demand.
The sharp decline in pricing comes after two years of record-breaking sales of raw diamonds. The market for natural diamond jewellery peaked between 2021 and 2022.
Zimnisky stated, “There was a parabolic move up, and now there is a correction on the opposite side.
However, a decline in the cost of raw diamonds does not necessarily translate into lower retail costs.
Regardless of whether the products are cheaper or more expensive on the back end, retailers normally do not change their in-store prices based on the raw diamond market in the short term. Retailers “set a price point and are fiercely protective of their gross margins,” claims Golan.
Despite the fact that the cost of rough diamonds is decreasing, the average cost of a one-carat round diamond at the store has increased by 3% since January 2020, according to him.
Some jewellers may attempt to take advantage of the chance to increase margins if wholesale prices decline in the near future, according to Zimnisky.
Retail sales are anticipated to increase during the winter holidays and into early 2024, according to industry analysts. The peak season for engagements occurs in the winter, and jewellery retailers often make money on holidays like Christmas and Valentine’s Day.
According to David Johnson, a representative for De Beers, one of the biggest diamond enterprises in the world, “Overall, we’re going to see a year-over-year decline of sales in the holiday season,” despite the possibility that this could cause a slight increase in the price of rough diamonds.
Zimnisky also predicts a market softening this year compared to the peaks of 2021 and 2022 but claims that the economic signs in the US are encouraging. He pointed out that “employment is strong” and that “the stock market is performing relatively well,” opening the door for a gradual increase in the price of raw diamonds in 2024.
Bottom Line
The cost of rough diamonds—the uncut, unpolished, and unrefined stones—has decreased in 2023 as a result of the post-pandemic public backlash against opulent goods.
The Zimnisky Global Rough Diamond Index indicates that prices have dropped to their lowest level in a year. Industry watchers claim that the drop is a result of a reduction in sales at jewellery counters.
