Diamond Prices are Going Up and Buyers are Being Careful

With diamond prices going up and an already fragile market, these and many other factors have begun to affect the diamond industry.

Following a strong growth experienced by the diamond industry last year, the start of 2022 showed momentum picking up. But with what diamond authority Rappaport describes as a "volatile supply situation and weakening consumer sentiment," it looks like a lack of clarity is now making buyers wary.

Adding more fuel to the fire, diamond prices have increased in February, with the RapNet Diamond Index (RAPI™) for 1-carat diamonds gaining 5.6% in February and 12.9% since the beginning of the year, as of March 1. The RapNet Diamond Index (RAPI™) pertains to the "average of the best priced 10 asking prices in each [diamond] category."

A Fragile US Market

Many factors have contributed to the increasing prices of diamonds in the market. For one thing, there are higher diamond rough costs, which forced manufacturers to raise the prices on their polished counterparts. Although the US demand helps support the market, economic and geopolitical uncertainty have caused their buyers to waver.

But what exactly does this entail? There's high US inflation, the promise of interest hikes, and the ongoing COVID-19 pandemic to consider. Moreover, Russia’s invasion of Ukraine is another reason for concern, especially with US sanctions on Alrosa. This prevents them from getting credit and has caused delayed money transfers, following the removal of Russian banks from international payment schemes.

Those delays have resulted in a disrupted supply from the miner—the world’s largest volume producer at that—possibly causing rough shortages.