Diamonds: Falling Prices and Future Outlook

The diamond market is going through a period of decline, with a sharp decrease in prices over the past two years.

According to 77 Diamonds, an important European online showroom specialised in diamonds and bespoke jewellery, various factors have caused this drop, including an oversupply of lab-grown diamonds and a reduction in global demand for luxury goods. To complicate the situation, there are also the effects of international policies, such as the ban on Russian diamonds imposed by G7 countries.

The data provide a detailed picture of how diamond prices, particularly round ones (the most common shape), have changed over the last two years. Natural 1-carat diamonds have seen their value decrease by 34%, while 2-carat diamonds have dropped by 49%. Lab-grown diamonds have experienced an even steeper decline: the value of a 1-carat lab-grown diamond has decreased by 73%, while the 2-carat one has lost 77% of its value. The oversupply, especially regarding lab-grown diamonds, has been one of the main factors of this drop.

Large investments in production capacity and technological advances in diamond cultivation have created a surplus that has further lowered prices. Tobias Kormind, co-founder of 77 Diamonds, commented: “The diamond market has a history of fluctuating values, and this cycle is always determined by the balance between supply and demand.” Currently, global demand for diamonds is falling, particularly in China, where economic uncertainty caused by the real estate crisis and the anti-corruption crackdown has reduced sales.

Moreover, the ban imposed by the G7 on Russian diamonds has affected demand, adding another element of instability. De Beers, one of the main players in the market, has also reduced production in its mines by 20%, signalling the difficulties the entire sector is facing. However, the outlook for the diamond market seems to be less pessimistic. Kormind suggests that we may have reached the bottom of this negative cycle. “Lab-grown diamond prices have stabilised, as they are now close to the minimum production cost,” he states. Regarding natural diamonds, the future appears uncertain but with signs of possible recovery, especially thanks to the economic policies currently in place in the United States. The introduction of Donald Trump’s “America First” policy, which includes tax cuts and investments, could stimulate demand for luxury, thus pushing prices upward.

For consumers, the good news is that diamonds are currently more affordable than in the past. With lower prices, this could be a favourable moment for purchases, especially for those looking for quality at lower costs. However, the market remains influenced by a series of global variables that could determine future price fluctuations.

Antonella Reina, Editor VO+