(IDEX Online News) - Global polished diamond prices rose by 1.4 percent in January 2011, compared with December 2010, according to the IDEX Online Global Polished Diamond Price Index. This was the sharpest increase in monthly prices since early in 2010. Year-over-year, the Index rose 9.3 percent, well ahead of the historic 2-3 percent annual increase in polished diamond prices during the past decade.

 

During the month, polished prices rose almost on a daily basis and nearly uniformly for almost all sizes. Only half-carat and smaller saw prices lagging somewhat, based on the IDEX Online Index. 

 

The graph below illustrates the sharp rise in polished diamond prices in January 2011.

 

Source: IDEX Online Research

 

Prices of 5 Carat Diamonds Leap Month over Month

In a time span of a single month, the price of 5 caraters gained 3 percent, followed by the strong performer of the past year, 3-carat diamonds, which gained 2.1 percent in January and 26.7 percent in the past year.

 

The graph below summarizes month-to-month price action for polished diamonds of various sizes.

 

Source: IDEX Online Research

 

Outlook: Higher Polished Prices Likely

With the threat of a double-dip recession highly unlikely, and with a strong holiday selling season confirming that consumers are willing to spend on jewelry, merchants are trying to make up for lost profits during the 2008-2009 recessionary period.

 

Rough diamond prices continue to rise sharply; this has put pressure on polished diamond suppliers to pass along their higher costs. Retailers are emboldened to raise prices, since consumer demand has strengthened significantly.

 

Our forecast calls for higher prices throughout 2011, but only time will tell how high diamond prices will go.

 

The full analysis of the polished diamond prices is available to IDEX Online Research subscribers and IDEX Online members here. Click here for more information on how to subscribe or become a member.