After bottoming in mid-2009 at around 108, the IDEX Online Global Polished Price Index has risen almost every month since late last year. Prices have risen steadily, with only a pause in July. We believe that this indicates that fundamental underlying demand is responsible for most of the price gains.

 

After a pause in July, polished diamond price data from August confirms that the long term trend remains positive and that polished diamond prices are headed higher over the next twelve months.

 

Source:  IDEX Online

 

Month-to-Month Polished Diamond Prices Up 0.5% in August

The IDEX Online Global Polished Price Index averaged 117.9 in August, a solid 0.5 percent increase over July’s average of 117.4. This was a notable gain over July’s paltry 0.1 percent increase over June.

Source:  IDEX Online

Year-to-Year Polished Diamond Prices Up 8.5%

The average IDEX Online Global Polished Price Index was a strong 8.5 percent higher than the average for August 2009. August was the seventh consecutive month that prices have risen on a year-to-year basis; further, the August price gain was the largest this year as the graph below illustrates, and it was the greatest gain since October 2008.

 

Source:  IDEX Online

 

Higher Diamond Prices Relatively Broad-Based

During August, the month-to-month prices of stones one-carat and smaller showed solid gains. Three-and-four carat stones also showed solid price increases.

 

The graph below illustrates the strength in prices in different diamond sizes compared to the prior month. Month-to-month prices of other size diamonds declined. We note that in June, four-carat diamonds spiked in price by over 5 percent on a month-to-month basis (versus May 2010), but pulled back modestly in July, and rose sharply in August. Clearly, there is demand for better quality three-and-four carat diamonds.

 

Source:  IDEX Online

 

On the other hand, year-to-year prices of large stones – four- and five-carat diamonds – have shown a much more modest price increase, as the graph below illustrates. The price index for four-carat polished diamonds was identical in August 2010 and August 2009. This is the result of uneven price declines last year: smaller stone sizes fell first, followed by larger stone prices later in the cycle.

 

“Snapshot” graphs of a single month are less meaningful than overall trends; diamantaires should look at the longer term movement of the IDEX Online Global Polished Diamond Price Index which illustrates that polished diamond prices are moving broadly higher.

Source:  IDEX Online

The graph below summarizes three years of price movement of polished diamonds by various key sizes.

 

Source:  IDEX Online

 

IDEX Online Index Summary Table

The table below summarizes the IDEX Online Index by month for the past three years.

Source:  IDEX Online

Outlook: Polished Diamond Prices Will Continue To Rise

We strongly believe that polished diamond prices will continue to rise from current levels, though there could be month-to-month plateaus. Not only is there solid fundamental demand from shoppers, but rough diamond prices have also risen earlier this year.

 

Some diamantaires recently raised prices based on their confidence in the prospects for future demand. With pricing pressure coming from the rough diamond suppliers and demand coming from consumers, polished diamond prices have no way to go but up.