The 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.