Rising Polished Diamond Prices Jolt Industry

A sharp rise in the past few days in polished diamond goods has caused many to express a feeling of uncertainty. According to the IDEX Online Global Polished Diamond Price Index, average prices have increased by 5.8 percent since January.

One area that has been surprisingly active in the very recent past, is that of small goods of 0.10 carat and smaller in clarities of I1 and higher. According to one trader that specializes in these goods, he witnessed a very sharp rise in demand for 0.005 carat goods. In 0.10 carat SI1+ goods prices have soared by 3-5 percent in recent weeks.

Very strong demand is also noted in 0.004 carat diamonds, goods that are often set in watches. According to one trader, he is seeing a rise in demand for this item from Chinese jewelry factories. These manufacturers have created new designs that make heavy use of these goods.

Another area this rise is noted is in high quality certified 1 carat and bigger goods – VS2 and better clarity with goods makes. A trader that focuses in these items noted that prices are firm and rising. Another added that prices in the Israeli market are especially good.

The increased activity in March follows a steep rise in prices in February. According to the IDEX Online price index, year-over-year polished diamond prices surged by 6.7 percent. On a month-over-month basis – February 2008 compared to January 2008 – polished prices increased by 1.6 percent.

Both of these gains were the largest monthly increases since the IDEX Online Global Polished Diamond Price Index was initiated in mid-2004.

Prices for diamonds two carats and above have been strong for some time and now half carat goods are joining, and polished prices are on an upward march.

The firming prices are taking place against the backdrop of a shaky global economy of a weak U.S. dollar, stock exchange collapses and fears of recessions.

In some developing countries that have been suffering from economic woes for some time, such as Iran, many are purchasing loose polished diamonds as an investment, however that does not seem to be a very wide global trend.

The rising polished diamond prices are not causing traders to jump in joy, though. One noted a feeling of “total uncertainty,” while another told IDEX Online that many do not know how to price their goods, especially after the Rapaport list prices were hiked Friday.