(IDEX Online News) – Polished diamond prices were largely stable in April. While this would usually be good news, a closer look reveals hints of possible price declines.

 

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

 

The IDEX Online Global Polished Price Index increased 0.04 percent in April compared to March. During April, however, prices increased slightly before closing 0.9 points lower compared to April 1.

 

Source: IDEX Online

 

An important trend emerging from month-over-month comparisons is the one seen in the graph below – the decline in price change momentum in past 11 months.

 

Prices increased more than 5 percent per month in June and July 2011 before declining in the second half of 2011 and have been nearly unmoved since the beginning of 2012.

 

Source: IDEX Online

 

Year-over-Year +7.1%

Year-over-year, polished diamond prices rose by 7.1 percent in April, based on average prices during the month. Year-over-year price gains are continuously eroding, as the post 2008 recession gush in prices has mellowed.

 

Rounds vs Princess

Five carat round diamonds are in demand against a shortage in supply, leading to a 7.3 month-over-month price increase.

 

With the exception of 3-carat rounds, the price of most other key size rounds has softened.

 

Princess cut diamonds are in rising demand, partially due to limited supply, leading to price increase of 2 percent and more.

 

Outlook

The current pause in prices follows a sharp increase that took place in the second quarter of 2011. Historically, diamond prices increase by about 4-5 percent annually. The dip in 2008-2009 and the subsequent rebound in 2010-2011 are not typical price trends in the diamond industry. Therefore, the calm trend of the past six months is a natural reaction to the volatility experienced in last year.

 

Long-term, the U.S., Chinese, Indian and Japanese economies are on a growth path, a positive trend that is expected to lead to growing demand for diamond jewelry. Juxtaposed against a declining supply, diamond prices are expected to solidify later this year and then increase.

 

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.