Rapaport Research: Certified Diamond Prices Decline 0.7% in November

Certified polished diamond prices edged down in November as the holiday season started with mixed prospects for the jewelry sector. Diamond dealers were active but retailers continue to efficiently manage sufficient inventories, with little promise for significant restocking in the New Year.

Superstorm Sandy and the presidential elections impacted U.S. sentiment at the start of the month but spending improved over the Thanksgiving weekend, despite the unresolved fiscal cliff negotiations. There are rising concerns that potential tax increases will reduce luxury spending. Global economic uncertainty continues to impact jewelry sales in China, particularly mid-to-high-end purchases. India’s Diwali festival was satisfactory for jewelers but high rupee-based gold prices have since reduced spending. 

The RapNet Diamond Index (RAPI) for 1 ct. diamonds fell 0.7 percent during November 2012. RAPI for 0.3 ct. stones was down 0.1 percent for the month, while RAPI 0.5 ct. diamonds declined 0.7 percent. RAPI for 3 ct. stones dropped 0.6 percent.

During the first 11 months of 2012, RAPI for 1 ct. diamonds fell 12.5 percent. The index is down 13.6 percent from one year ago.

According to the just-released Rapaport Research Report, “Holiday Promise,” polished diamond markets were active in November. There is decent demand for VS2-SI clarity goods and strong demand for small size fancy shapes as price sensitive buyers shifted to lower price points.  

Rough trading has been relatively quiet as Indian diamond cutting factories were closed for most of November during the Diwali festival and subsequent wedding season. Rough prices held relatively firm during the month as De Beers and ALROSA reduced supply. Small and mid-size mining companies noted improved prices following a weak third quarter.

Diamond markets are expected to continue to tread cautiously in the short term with December trading focused on filling last-minute orders before the end-of-year quiet period. Holiday sales may deplete some retail inventory and jewelers are unlikely to start significant inventory build-up in January. While the diamond market searches for a bottom, trading is expected to continue at the slightly depressed levels that have been prevalent for most of 2012.