(IDEX Online) - After bottoming in September 2009 at just above 108, the IDEX Online Global Polished Price Index rose almost every month since late last year until the end of August 2010. In September and October, polished diamond prices wilted, and then declined sharply during the final week of October.

 

In November, the trend reversed sharply: polished diamond prices rose to 118.5 at the end of the month, and made a total recovery back to levels last seen in early September 2010.

 

The graph below summarizes the diamond price index by month for the past two years. As the graph illustrates, prices have risen at a steady, consistent level, with pauses in July, September and October of this year.

 

Source: IDEX Online

 

Month-to-Month Polished Diamond Prices Up Modestly

The IDEX Online Global Polished Price Index averaged 117.9 in November, a modest 0.1 percent decrease over October’s 117.8. The problem with this statistic is that the “average” obscures the daily recovery in polished diamond prices experienced broadly across the market in November.

 

After October’s month-to-month decline, prices comparisons on a monthly basis have turned positive once again in November.

 

During an economic recovery cycle, there is often volatility in month-to-month indices such as the IDEX Online Polished Diamond Price Index as the economy lurches ahead at an uncertain pace.

 

The graph below illustrates month-to-month price changes. The lack of price momentum is clear in July, September and October. Earlier this year, polished diamond prices posted solid month-to-month gains.

 

Source: IDEX Online

 

Year-to-Year Polished Diamond Prices Up Due to Easy Comparisons

The IDEX Online Global Polished Diamond Price Index for November, 117.8, was a strong 8.4 percent higher than the average for November 2009.

 

November was the tenth consecutive month that prices have risen on a year-to-year basis. However, the October and November price gain of 8.4 percent was more modest than in some prior months, as the graph below illustrates. This price weakness reflects softer-than-expected demand for polished diamonds in October and early November. However, it is important to note that the low point in the IDEX Online Polished Diamond Price Index occurred in September 2009; thus, comparisons this year were very easy against last year’s low point.

Source: IDEX Online

 

Diamond Prices by Size Were Mixed in November

On a month-to-month comparison, key diamond sizes reflected a wide range of price changes in November compared to October: larger diamonds posted a solid price gain, while smaller carat stones experienced a smaller price gain.

 

Source: IDEX Online

 

 

Year-over-year prices for polished diamonds by size also reflected mix gains in November. Four and five carat diamonds have shown modest price increases than smaller stones, as the graph below illustrates. However, three-carat gemstones spiked.

 

It is important to note that the year-over-year polished diamond price comparisons in November remained easy. Thus, we would expect large percentage gains this year.

 

“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 have been moving broadly higher, despite pauses in July and September, as well as October. 

 

Source: IDEX Online

 

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

Source: IDEX Online

Outlook: Polished Diamond Prices Headed Higher

We believe that polished diamond prices will likely react to near term demand: with uncertainties looming, prices will languish.

 

Longer term, as fundamental demand from consumers shows solid strength, prices for polished diamonds will increase.