Diamond prices drop like a stone as global economy slows

Diamond prices are on the slide again, as macro economic gloom continues. The Rapaport Diamond Trade Index, which is derived from the average asking price for the top 25 best-quality one-carat diamonds and is seen a global benchmark, fell to $9,391 last week.

Rough stones giving back the price increases seen in the earlier part of the year. 

This represents a fall of 3.8pc in the year to date and 9.8pc over the past 12 months. “This decline should remain in context, as the S&P GSCI commodity index has declined by 9.8pc and 14pc over the same time period,” said Kieron Hodgson, an analyst at Charles Stanley.

He added that similar trends are being seen on other benchmarks, with “rough stones giving back the price increases seen in the earlier part of the year”.

“Our forecasts for both rough and polished diamond prices to be around 5pc lower for the year shall remain unchanged at this point,” he said.

However, the long-term trend looks positive. Worldwide demand for rough diamonds may climb more than 6pc between 2010 and 2020, according to consultants Bain & Co. This is higher that the expected growth in diamond supply.

Because of these expected demand trends, the Rapaport Group plans an online diamond exchange for banks and other financial institutions to benefit from rising demand in China and India. This RapX exchange will open in October.

Copper bounces on stimulus hopes
Copper prices rose last week for the first time in seven weeks. The European debt crisis is coming to a head and speculators are betting that more stimulus measures will be announced worldwide to avoid the crisis deepening. However, London Metal Exchange stockpiles rose last week at the highest rate since January 2009, rising 8.6pc to 249,450 tonnes, so this could limit price gains. Copper is the most economically sensitive metal because of its wide range of uses.