Diamond prices have fallen 18% from their peak — and analysts say there's still more room to plunge

"Diamonds are a girl's champion friend," arsenic the aged opus goes.

But they're not an investor's favourite currently, with the precious gems losing immoderate important worth implicit the past fewer months.

Diamond prices are down 18% from their all-time highs successful February 2022, and are little 6.5% year-to-date, according to 1 Global Rough Diamond Price Index. And their worth is astir to dive further, marketplace watchers predict.

"A somewhat better-than-average-quality 1-carat earthy diamond was $6,700 a twelvemonth ago, contiguous this same diamond is selling for $5,300," Paul Zimnisky, the CEO of Paul Zimnisky Diamond Analytics, told CNBC.

Diamonds, alongside different jewelry, saw elevated prices during the Covid-19 pandemic which culminated successful a highest aboriginal past year.

"Consumers were acceptable to spend," absorption consulting steadfast Bain & Company said successful a study dated February last year. "They were flush with currency from buoyant superior markets and economical stimulus programs, and anxious to walk it connected meaningful gifts for their loved ones," they said.

When radical could not question oregon devour out, each of that excess wealth went into luxury goods and jewelry, said CEO of Angara Jewelry Ankur Daga.

And erstwhile the system started opening up again, diamond prices started moderating, and slid into a "steep decline," helium added.

Continued contention from man-made diamonds, a slower Chinese economical betterment and an uncertain macroeconomic backdrop are besides drivers of a lackluster market, according to manufacture experts.

An expanding magnitude of consumers are turning to lab-grown diamonds, said Edahn.

"The stock of laboratory grown diamond income versus earthy diamonds is rising. In 2020, they were conscionable 2.4%. In 2023 to day they are already up to 9.3%," helium said.

Lab-grown diamonds are made successful a controlled situation utilizing utmost unit and vigor that recreates however earthy diamonds are forged hundreds of kilometers successful the Earth's mantle.

They are chemically, physically and optically identical to earthy diamonds, and are deemed to beryllium a "perfect substitute," Daga said. But much importantly for astir — they are a batch cheaper.

And much radical are turning to them for their prime of engagement rings.

"Lab is indistinguishable implicit mined diamond, and if I tin get a bigger diamond for the aforesaid price, wherefore not?" said 29-year-old Singaporean Jonathan Lok, who projected to his fiancée with a 0.76 carat lab-grown diamond ringing precocious past year.

He added that his fiancée had specified for a smaller diamond, and did not privation him to walk an exorbitant magnitude connected the ring.

Prices of lab-grown diamonds person been "nosediving," said Edahn Golan, the CEO of Edahn Golan Diamond Research & Data, with prices sinking 59% successful the past 3 years.

"Three years ago, you would beryllium capable to bargain a laboratory grown equivalent 20% to 30% disconnected of the earthy price. Now it's anyplace betwixt 75% and 90% disconnected earthy prices," Daga said, attributing the cheaper prices to machines becoming much businesslike successful producing much man-made diamonds.

The lab-grown diamond industry, which is energy-intensive, person besides been seeing soaring vigor costs taper disconnected from its peak.

In the carnivore lawsuit scenario, helium expects earthy diamond prices to grounds a driblet of betwixt 20% to 25% from existent prices successful the adjacent 12 months, which would people a 40% driblet disconnected the February peak. And Daga is not alone.

"There is country for continued terms declines, and that is simply a precise apt scenario, particularly since retailer margins for laboratory grown diamonds are particularly high, astir 60% compared with 34% for earthy diamonds," said Golan.

However, adjacent so, the plunge could yet deed a "natural floor" owed to labour costs.

"Labor costs person been going up still, and labour is inactive a precise captious portion of producing the diamond. So determination is simply a earthy level somewhere," Daga said, adding that a flatline volition travel aft a 25% drop.

Additionally, diamond marketplace watchers are not expecting sanctions connected the world's starring producer, Russia, to pb to terrible terms spikes.

Earlier successful May, the G7 economies convened a treatment connected imposing sanctions connected Russian diamonds, with the United Kingdom taking the lead successful sanctioning Russia's state-owned institution Alrosa.

"The Russians person ramped up diamond income successful caller months successful an effort to claw backmost marketplace share lost last twelvemonth pursuing the disruption successful trading," Zimnisky stated.

Russia is the world's largest producers of diamond, followed by Botswana and the Democratic Republic of Congo, according to the Diamond Registry.

According to Edahn, Russia volition look nary issues selling its diamonds contempt the sanctions, particularly if the larger buyers proceed to instrumentality a radiance to Moscow's prized stones.

"Countries similar India, UAE, and adjacent the EU, didn't spot sanctions connected unsmooth diamond imports. So again, nary existent shortages," helium said.

India is the world's apical diamond importer, with the U.S. coming successful second, followed by Hong Kong, Belgium and the UAE.