Diamonds: prices falling, but optimism for the future
The diamond market is currently experiencing a downturn, with a significant drop in prices over the last two years. According to 77 Diamonds, a leading European online showroom specializing in custom-made jewellery and diamonds, this decline has been caused by several factors, including an oversupply of lab-grown diamonds and a global reduction in luxury goods demand. Additionally, international policies, such as the G7 ban on Russian diamonds, have further complicated the situation.
The data paints a clear picture of how diamond prices, particularly round diamonds (the most common shape), have changed over the past two years. A 1-carat natural diamond has seen a 34% decrease in value, while a 2-carat diamond has dropped by 49%. Lab-grown diamonds have experienced an even sharper decline: the value of a 1-carat lab-grown diamond has fallen by 73%, and a 2-carat lab-grown diamond has lost 77% of its value.
One of the primary drivers of this drop has been the oversupply, especially of lab-grown diamonds. Significant investments in production capacity and technological advancements in diamond cultivation have created a surplus, further driving down 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 declining, especially in China, where economic uncertainty caused by the real estate crisis and anti-corruption measures has reduced sales. The G7’s ban on Russian diamonds has also impacted demand, adding another layer of instability. De Beers, a key player in the market, has even reduced production in its mines by 20%, signaling the challenges the industry is facing.
However, the outlook for the diamond market seems less pessimistic. Kormind suggests that the bottom of this negative cycle may have already been reached. "Prices for lab-grown diamonds have stabilized, as they are now close to the minimum cost of production," he says. As for natural diamonds, the future remains uncertain, but there are signs of potential recovery, especially with the economic policies in the United States. The introduction of Donald Trump’s “America First” policy, which includes tax cuts and increased investment, could stimulate demand for luxury goods, thus pushing prices higher.
The good news for consumers is that diamonds are currently more affordable than before. With lower prices, it may be an opportune time to buy, particularly for those seeking quality at a reasonable cost. However, the market remains subject to global variables that could lead to future price fluctuations.
Antonella Reina, Editor VO+
