Polished Diamond Index Begins Year on Stable Footing

(IDEX Online News) - The new year began much the same as it ended - at least as far as polished prices were concerned - with very little happening. 

In a pattern that seems to be repeating itself, January prices started at 120.99 and ended at almost the same point - 120.90 - with a slight dip at the mid-month mark that soon righted itself. 

Diamond Prices Continue Steady Course

Polished diamond prices have barely changed over the past seven months and have been hovering close to the 121 mark from a high of 124 at the start of 2019 - a high that seems like an impossible point to reach once again. If anything, prices started the new year even further down, hitting their lowest point in the past two years. 

On a month-to-month basis, January's global polished diamond prices were down very slightly compared to December. This trend, of tiny changes, has been evident for the past few months with prices seemingly unable to gain any positive traction. On the other hand, prices may not be climbing, but at least they are not falling, something that happened throughout most of 2018-2019.

On a year-over-year basis, January's average prices declined 2.8 percent compared to January 2019.

Diamond Prices by Size Hold Steady

Once again, on a month-over-month basis - January 2020 versus December 2019 - there was little noticeable change in prices. Even 4-carat diamonds, which tend to experience a significant amount of volatility saw prices rise by just 1.5 percent. 

On a year-over-year basis there was more movement. Unfortunately, none of it was in the right direction. Prices for all the key sizes of goods have declined for the past five months with the price drop in 4-carat stones a defining characteristic of 2019 that looks like it might carry over into 2020. 

Over the longer term, 4-carat stones have shown the most price volatility since 2015. Other sizes have been more constant, with prices rising and falling more gently, as clearly shown on the graph below.

Outlook

Polished prices have been depressed for the past couple of years, but could there be a glimmer of light ahead? The results of the first De Beers Sight of the year were certainly positive. The sale was provisionally valued at $545 million, which compares favorably to the $500 million worth of goods purchased at the first Sight of 2019 and the $425 raised at the last sales event of 2019. 

Chinese New Year was supposed to be a pivotal event with a pick-up in sales. With the outbreak of coronavirus in China and the cancellation of many CNY celebrations, the optimism that accompanies a fresh year seems misplaced. China is on something of a lockdown and news that luxury goods companies were shutting stores in Hong Kong has only dampened spirits further. 

There are still high hopes that Valentine's Day will be strong, although whether the leap year has any effect on diamond buying remains to be seen. 

At this point, with the upcoming elections in the U.S., the UK having finally left the EU and the possibility that coronavirus could turn into a worldwide pandemic, 2020 feels very unstable. How it will turn out is anyone's guess.