Diamond prices plummet as luxury goods market takes hit

Even the top end of town has taken a hit post-pandemic, as diamond prices tumble to their lowest point in a year.

The price of rough diamonds — the raw, unpolished and uncut stones — has plummeted this year as cost of living pressures squeeze even the wealthiest consumers.

Prices for the rough stones have hit their lowest point in a year, according to the Zimnisky Global Rough Diamond Index.

Industry analysts attributed the slump to dwindling sales at the jewellery counter, meaning jewellers are buying fewer rough diamonds as they attempt to sell down their existing stock.

The price of rough diamonds, like this rare pink one, has slumped. Picture: Lucapa Diamond Company via NCA NewsWire

Unfortunately for shoppers, a drop in rough diamond prices usually doesn’t mean cheaper price tags in stores.

Jewellers typically don’t adjust their prices based on the rough diamond market (at least in the short-term).

In fact, even though rough diamond prices are falling, a one-carat diamond at the store is about three per cent pricier now than it was in January 2020, according to independent diamond analyst Edahn Golan.

“Retailers set a price point, and they’re fiercely protective of their gross margins,” Mr Golan told CNN.

“In the short term, if wholesale prices fall, some jewellers are going to try to use the opportunity to capture more margin,” agreed global diamond analyst Paul Zimnisky.

A huge, tennis ball sized rough diamond. Picture: by Stephanie de Sakutin /AFP

Experts said the fall in rough diamond prices was likely a correction after the era of sky-high lockdown spending.

While shoppers spent less money on dining out and travel during lockdowns, “people had excess money to spend on discretionary purchases”, Mr Zimnisky explained.

In 2021 and 2022, demand for natural diamond jewellery hit an all-time high. Now, experience-based industries like restaurants and travel are showing signs of recovery, while material goods markets have taken a hit.

“There was a parabolic move up, and now there’s a correction on the other side,” Mr Zimnisky said.

Though demand has fallen, diamond sellers are about to enter their busiest period of the year.

Christmas and Valentine’s Day are typically lucrative holidays for jewellers and, in the northern hemisphere, the winter months are peak engagement season.

While the busy period may lead to a small spike in rough diamond sales, it’s unlikely to reverse the downward trend.

David Johnson, a spokesperson for De Beers, one of the largest diamond companies in the world, said: “Overall, we’re going to see a year-over-year decline of sales in the holiday season”.