Monthly update on the diamond market - September 2024

Welcome to our monthly column dedicated to updates on the diamond market. In this space, we will analyze the main trends and the most relevant events that characterized the month of September. The information provided is sourced from reliable outlets, such as Rapaport News and IDEX.

Overview of the market

In September 2024, the diamond market continued to experience a decline in prices, reflecting the persistent weakness in global demand and excess supply.

Specifically, the RapNet Diamond Index (RAPI™) reported a price reduction of 1.6% for one-carat diamonds during the month. Diamonds of other carat weights also saw price declines: 0.30-carat and 0.50-carat diamonds decreased by 3.1% and 2.5%, respectively, while three-carat diamonds experienced a more modest decline of 1.3%. This trend reflects the challenges faced by key markets such as the United States and China, where demand for natural diamonds continues to be impacted by competition from synthetic diamonds and global economic uncertainties.

Key events of September 2024

• Most categories of round diamonds and "fancy" diamonds (those not in the standard color range D-Z) experienced a decline in prices, with some exceptions in certain categories, as reported by the IDEX price index. The downward trend primarily affected round diamonds weighing 0.50 carats and above, while the categories that saw price increases were fewer compared to previous months. Even in the case of fancy diamonds, activity was limited, with a prevailing trend of declining prices, although increases were noted in some categories such as diamonds weighing 0.23 to 0.29 carats, 3 to 3.99 carats, and 5 to 5.99 carats. 
• Consumer demand struggles to recover, while the demand for synthetic diamonds continues to strengthen, according to IDEX Online. 
• In September 2024, round diamonds remained the most popular shape on the market, representing 76.87% of total preferences, despite a 10.67% decline compared to August 2024. The Princess cut, which ranked fifth in August, rose to second place, experiencing a 393% increase. The oval cut held third place with an 18.28% increase, while the cushion cut remained in fourth place with a growth of 13.99%. The emerald cut, which was in second place in August, dropped to fifth place with a 14.80% decrease.

© Copyright 2024, Rapaport USA Inc.  

Some curiosities from the world of diamonds

The treasure of the Tsar of Bulgaria at auction

The renowned auction house Sotheby's will soon auction an extraordinary collection of jewelry belonging to the Bulgarian royals, consisting of over 100 unique pieces, including necklaces, rings, brooches, and tiaras, with a total estimated value between 1.2 and 1.8 million dollars.

The auction, which presents a unique opportunity to acquire exquisite antique pieces, will be an event closely followed by collectors and enthusiasts of vintage jewelry.

One of the most coveted pieces is the tie pin belonging to Tsar Ferdinand, which features a 2.08-carat gray-blue drop diamond and four other colored diamonds forming a lily. The pin is expected to sell for a price between 500,000 and 700,000 dollars.

Another notable piece is the bracelet that belonged to Tsar Ferdinand's eldest daughter, Princess Eudoxia, made up of rubies, sapphires, emeralds, and diamonds.

This auction, which will take place in Geneva, represents a unique opportunity for collectors and enthusiasts of antique jewelry to acquire one-of-a-kind pieces of significant historical value.

Luxury cases for diamond-adorned Apple Watches

Hublot has launched a new luxury case for the Apple Watch, priced at 20,000 dollars, as part of a limited edition that includes only ten pieces. Each case is adorned with 155 hand-set diamonds, one by one. This accessory transforms the classic Apple Watch into a true jewel, creating a unique combination of cutting-edge technology and high-end jewelry craftsmanship.

In-depth analysis of the month:

Alongside the decline in diamond prices, the value of gold is skyrocketing

The price of gold has reached new historic highs, continuing an unstoppable growth trend. In recent months, the value of gold has reached $2,685.42 per ounce, marking an increase of over 30% since the beginning of 2024. Currently, the price stands at $2,661.60 per ounce, equivalent to €76.89 per gram. This positive trend is generally affecting the luxury goods market, a sector where sales remain strong.

(Source: https://tradingeconomics.com/commodity/gold)

Gold has always been considered a safe investment and a "safe haven" asset for various reasons related to both its intrinsic characteristics and its historical role in financial markets. A "safe haven" refers to an asset deemed secure and stable that investors tend to choose during periods of economic uncertainty, political instability, or market turbulence, in order to protect capital and minimize the risk of losses.

Reasons for the increase in gold prices

The unstoppable rise in gold prices is the result of a series of factors, including:

• Global Economic Uncertainties 
  Gold has always been considered a "safe haven," especially in times of crisis. Given the current economic instability and growing concerns about inflation primarily caused by geopolitical tensions such as the conflict in Ukraine and the recent escalation in the Middle East, many investors are turning to gold to safeguard their wealth. In simple terms, the fear of a global recession drives investors to consider gold as a protection against uncertainty.
• Fluctuations of the Dollar
  The decline of the dollar has made gold more accessible to international investors. The monetary policies of the Federal Reserve, which have led to the weakening of the U.S. currency, have made gold an attractive investment option. When the dollar loses value, investors tend to diversify their portfolios by investing in gold, thus pushing the prices of the precious metal higher.
• Increased Demand from Central Banks
  In recent years, central banks worldwide have increased their gold reserves as a protective measure against inflation and to diversify their currency reserves. In 2023, central banks purchased over 1,100 tons of gold, a historical record. This accumulation trend by central banks is playing a crucial role in the rise of gold prices.
• Increase in Jewelry Demand
  The demand for gold jewelry, particularly in Asian markets such as China and India, has risen. According to the World Gold Council, the demand for jewelry increased by 10% in the third quarter of 2024.
• Decreasing Extraction  
  Gold is becoming increasingly rare, and consequently, production is declining. Global spending on the search for new deposits has drastically decreased in the last ten years, against a backdrop of continually growing demand, another factor contributing to rising prices.
• Future Outlook  
  According to experts, the price of gold will continue to rise. Predictions suggest that in the near future, prices could fluctuate between $2,000 and $2,600 per ounce. Analysts believe that given the context of rising inflation and instability, gold should maintain its appeal as a safe investment.

Why does the price of gold rise while the price of diamonds falls?

As we have seen, gold continues to increase in value, while diamonds are experiencing a steady decline in prices.

The prices of gold and diamonds are influenced by different factors, resulting in distinct market trends for each asset. The value of gold is closely linked to its role as a "safe haven," making it highly sensitive to macroeconomic factors such as inflation, currency fluctuations, and geopolitical tensions. The price of gold is affected by factors like central bank reserves, demand in the jewelry sector, and overall economic stability. In times of financial uncertainty, investors tend to choose gold, driving up its price due to the perception of stability and liquidity it offers.

Diamonds, on the other hand, follow a more complex pricing logic, primarily determined by the balance between supply and demand in the luxury goods market. Factors such as quality, size, and rarity significantly impact their value. Unlike gold, diamonds are not standardized as a global commodity, making their prices less transparent and more variable depending on certifications and market conditions. Additionally, the emergence of synthetic diamonds has introduced a new form of competition, affecting the demand for natural diamonds. While high-quality diamonds may see price increases due to their rarity and market appeal, their trends are generally more influenced by consumer preferences and luxury goods demand rather than macroeconomic factors.

This difference in pricing dynamics means that gold tends to fluctuate in response to global economic events, while diamond prices are more closely tied to specific industry trends and consumer preferences.

Conclusions

Overall, the diamond market continues to undergo a phase of adaptation and transformation, driven by an uncertain global economic environment and increasing competition from synthetic diamonds. At the same time, gold has reaffirmed its role as a safe haven, benefiting from geopolitical tensions and economic fluctuations. While natural diamonds retain strong symbolic and cultural value, their market performance is affected by greater volatility and sector dynamics. Looking to the future, it will be interesting to see how these two markets evolve in response to economic changes and consumer preferences.

Stay tuned for more updates and insights into the fascinating world of diamonds!