Diamond prices are down as people spend more on travel and food

A pedestrian views diamond jewelry in the window of a store in the Diamond District neighborhood of New York.A pedestrian views diamond jewelry in the window of a store in the Diamond District neighborhood of New York.

In 2023, the cost of rough diamonds—the uncut, unpolished, and unrefined stones—has decreased as a result of the post-pandemic consumer backlash against luxury goods.

The Zimnisky Global Rough Diamond Index indicates that prices are at their lowest point in a year. According to industry observers, the slump is a result of falling jewelry counter sales.

During the epidemic, consumers spent less on dining out and travel, so “people had excess money to spend on discretionary purchases,” according to Paul Zimnisky, a worldwide diamond expert.

Diamond price adjustment

Due to people favoring services over jewelry, diamond prices have changed. Analysts claim that instead of spending money on opulent objects, people are dining out, traveling, and enjoying experiences.

According to independent diamond expert Edahn Golan, the market for diamonds is entirely influenced by consumers. Retail prices and, to some extent, rough diamond prices are influenced by consumer demand for diamond jewelry. By investing hundreds of millions of dollars in advertising, retailers fuel consumer demand.

The plummeting prices follow two record-breaking years in rough diamond sales. In 2021 and 2022, demand for natural diamond jewelry was at an all-time high.

Zimnisky stated, “There was a parabolic move up, and now there is a correction on the opposite side.

However, a decline in the cost of raw diamonds does not necessarily translate into lower retail costs.

Regardless of whether the products are cheaper or more expensive on the back end, retailers normally do not change their in-store prices based on the raw diamond market in the short term. Retailers “set a price point and are fiercely protective of their gross margins,” claims Golan.

Despite the fact that the cost of rough diamonds is decreasing, the average cost of a one-carat round diamond at the store has increased by 3% since January 2020, according to him.

Industrial analysis

Some jewelers may attempt to take advantage of the chance to increase margin if wholesale prices decline in the near future, according to Zimnisky.

Retail sales are anticipated to increase during the winter holidays and into early 2024, according to industry analysts. Peak season for engagements is in the winter, and jewelry retailers often make money on holidays like Christmas and Valentine’s Day.

According to David Johnson, a representative for De Beers, one of the biggest diamond enterprises in the world, “overall, we’re going to see a year-over-year decline of sales in the holiday season,” despite the possibility that this could cause a slight increase in the price of rough diamonds.

In contrast to the market peaks of 2021 and 2022, Zimnisky also predicts a market softening this year, although he claims that the economic signs in the United States are encouraging. He paved the stage for a gradual recovery of rough diamond prices in 2024 by stating that “the stock market is performing relatively well and employment is strong.”

Retailers maintain high prices despite falling rough diamond prices

Although the cost of raw diamonds has decreased, it is unlikely that consumers would find lower price tags in stores. Normally, retailers don’t change their in-store prices in response to transient swings in the price of rough diamonds. Retailers set their price points and fiercely guard their gross margins, as industry experts have noted. The average cost of a one-carat round diamond in retailers is currently 3% more expensive than it was in January 2020, despite the fact that the price of rough diamonds has decreased. If wholesale prices decline, some jewelers might try to increase their margins, but to conclude on a high note, merchants keep their pricing the same.

Leave a Reply

Your email address will not be published. Required fields are marked *