Certified Diamond Prices Decline 1.8% in October

Certified polished diamond prices continued to decline in October as economic and political uncertainties have diminished holiday expectations, Rapaport reported.
Trading quieted toward the end of the month as Hurricane Sandy halted business in New York’s diamond market. There is some concern that the storm will impact holiday luxury sales along the East Coast as consumers focus on necessities during the recovery period and put holiday gift buying on hold.  
In China, there was stable jewelry demand during the October 1 Golden Week but growth continues to slow and the holiday did not restore Far East consumer confidence. Diamond buyers suspect the market has not yet bottomed out. The volatile rupee and high gold prices continue to unnerve Indian dealers and consumers.
U.S. elections and China’s leadership transition have brought additional uncertainty to those respective markets.
In October, the RapNet Diamond Index (RAPI) for 1 ct. certified diamonds fell 1.8 percent. RAPI for 0.3 ct. stones rose 0.2 percent while RAPI for 0.5 ct. diamonds decreased 1.1 percent. RAPI for 3 ct. stones fell 1.4 percent. Trading remains cautious and budget-conscious diamond buyers continue to focus on commercial quality VS2-SI goods.
During the first 10 months of 2012, RAPI for 1 ct. diamonds fell 11.9 percent. RAPI for 1 ct. stones is down 13.8 percent from one year ago.
Diamond cutters are finding it difficult to profit on their rough supply. They have curbed manufacturing and many small-to-medium sized factories in India are taking extended Diwali vacations. Rough prices at mining company tenders firmed slightly in October, while prices from the major contract suppliers remain comparatively high. A large influx of high-priced De Beers goods put additional pressure on the rough market. Trading of De Beers goods on the secondary market has been weak as premiums have slimmed and some boxes are selling at slight discounts.
Despite the declines, the mood among traders improved slightly in October, compared to the quiet third quarter period. According to the just released Rapaport Research report, “Mixed Sentiment,” dealers were spurred by hope that the holiday season will raise trading volume in the coming two months. Buyers are looking for goods but are watching prices as they are prepared to wait out the downturn before making larger inventory purchases again. The diamond market appears content to ride out the rest of the year with the hope that better prospects lie further ahead.