Hanging in the Balance

Bridal DiamondThe diamond industry ended the first quarter of 2012 with a sense of relief. Trading has ‎been steady but cautious and prices in March were relatively firm. While business has not ‎been booming, it could have been worse. The preceding third and fourth quarter of 2011 ‎certainly were. ‎

The diamond market mirrored trends in the global economy, in much the same way it did ‎in 2011. Cautious stability set in largely due to the absence of any major economic event ‎that might have tilted the balance. Or, perhaps the market caution was a symptom of the ‎real possibility that such a calamity might still occur. ‎

The European crisis is still spreading from Greece to Spain to Portugal and there are ‎indications that the pace of growth in India and China will slow this year. In contrast, rising ‎consumer confidence in the U.S. and bullish financial markets, which beat analyst ‎projections for the quarter, helped inject some positive diamond market sentiment. ‎

Even with the apparently upbeat news from the U.S., global jewelry retail growth is ‎subdued, at least in volume, if not also by value. Certainly, any growth reported has been ‎spurred by jewelry price increases that took effect over the past year. Consumers are ‎shifting to lower price points and are prepared to compromise on size and quality to meet ‎their budgets.‎

Overall, diamond prices have held steady in the first quarter, particularly since the Hong ‎Kong show in mid-February and continuing through the end of March. The RapNet ‎Diamond Index (RAPI) for 1.00-carat certified diamonds fell 2.7 percent to 94.36 during ‎the quarter, as published this week in the Rapaport Research Report, “Slow Yet Stable.” ‎The sharpest declines occurred in February. ‎

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