diamond futures

Emerging nations drive demand for diamonds

Isaac Mostovicz writes that the diamond market is looking strong for 2011...

Although the financial crisis had a significant impact on demand in the jewellery market, with sales in late 2008 declining to below 2005 levels, the market is now on the up again; Gem Diamonds recently reported an upturn in prices thanks to increased demand in the US and emerging markets.

The recovery really gathered pace in late 2010. Now overall diamond prices are running at an average of more than $3,000 per carat, helped along by big finds such as that in the Russian diamond-rich area of Yakutia, where a huge diamond weighing a reported 136.35 carats has been recovered.

According to a Deutsche Bank analysis that The Independent recently reported on, continued strength is forecast as diamond prices run ahead of other commodities over coming years. Understanding demand for diamonds, they say, “requires an understanding of the end product jewellery market”, although investors should also keep an eye on any inventory issues in the pipeline.

Growing demand has driven operational developments in emerging markets too, the All-India Gems & Jewellery Trade Federation (GJF) recently joined hands with Israel-based online news portal, IDEX, to launch the Diamond Retail Benchmark (DRB), the first ever retail rate list for the sale of diamonds in India. This is designed as a consumer assurance initiative, but also demonstrates the growing interest from such nations.

Strong demand looks set to continue, and according to a recent article in The Daily Telegraph, appetite for diamonds is expected to grow as developing nations such as China and the Middle East develop their taste for luxury goods in line with rising wealth levels.

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