(IDEX Online News) – Polished diamond prices inched up in February, after a six-month downward drift. Average prices increased 0.8 percent in February compared to January, according to the IDEX Online Global Polished Diamond Price Index.

 

The full analysis of the polished diamond prices is available to IDEX Online Research subscribers and IDEX Online members here.

 

Source: IDEX Online Research

 

All it took was a successful diamond trade show to lead the turnaround in polished diamond prices. Prices continued their six-month sink until the last week of February, when the Hong Kong International Jewellery Show took place.

 

Strong demand for loose polished diamonds at the show stopped the decline in prices and led the modest increase that followed.

 

The IDEX Online Index finished at 140.3 on February 29. During the month, the IDEX Online Index fell to a low of 139.2, before recovering.

 

Source: IDEX Online Research

 

Polished diamond prices in February rose 14.5 percent year-over-year. Since last July 2011, the year over year comparisons have been slowing.

 

Diamond Prices:  Key Sizes Generally Higher in February

Prices edged higher for most – but not all – of the major polished diamond sizes in February versus January.

 

• Prices for most round diamonds smaller than three carats were slightly higher. However, prices for three- and four-carat round diamonds were lower.

• Five-carat round diamond prices rose sharply, after languishing for several months. Clearly, the “bling” buyers are back in the retail market, after sitting out the recession.

Source: IDEX Online Research

 

Outlook: Near-Term Factors Turning Positive

In the short term, most economists are predicting that the U.S. economy in 2012 will modestly outpace 2011’s tepid growth. OECD data, such as the Composite Leading Indicators’ positive momentum, is being driven primarily by the U.S. as well as Japan, with similar signs emerging in India and Russia. There is a strong correlation between economic cyclicality and diamond demand. Therefore, if the economy improves in 2012, it is reasonable to assume that polished diamond demand will strengthen in this market.

 

Offsetting this, the Composite Leading Indicators for the Euro Zone, China, and Brazil continue to point to slower economic growth.

 

Longer term, polished diamond prices appear to be headed higher due to several factors within the diamond market. Emerging markets, including China and India, are poised for long-term growth.

 

Rough diamond supplies appear to be flat for the next decade, more clearly so for 2-carat rough and larger. With flattish supply but rising demand, polished diamond prices are heading upwards in the long-term.

 

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.