Editor’s Note
This article examines the diverging trends in precious metals and gemstones, highlighting how geopolitical factors and shifting consumer preferences are reshaping the jewelry and investment landscapes.
Gold and silver prices continue to climb, while diamond prices have fallen significantly. Here’s why.
The jewelry industry, as well as investors, are witnessing a rather surprising phenomenon. While gold and silver prices seem to be reaching new all-time highs daily, diamond prices appear to be falling. The prices of gold, the quintessential safe-haven asset, and silver have also reached new highs due to geopolitical reasons. This latest surge follows a threat from US President Donald Trump to impose new tariffs starting in February on eight European countries that oppose US control over Greenland. Furthermore, in response to the threat, the European Union is considering imposing counter-tariffs worth $93 billion. This tension has driven the spot price of gold up by 1.8%, to $4,677.82 per ounce. Silver also rose further, hovering around $94 (+4.09%). Other metals used in jewelry are also rising: platinum reached $2,350.
Why, on the other hand, is the price of diamonds falling? The most coveted gems have lost value. In particular, the price of smaller diamonds, up to 1 carat, has fallen, with a reduction of up to 36% in one year. However, the value of larger gems has decreased by between 5% and 6%. So, why are diamond prices falling? Martin Rapaport, a businessman considered an expert in the diamond market and founder of the Rapaport Diamond Report, a price list that represents the standard for diamond pricing, offered an answer.
At Vicenzaoro in January, during a talk organized by the International Confederation of Jewellery (CIBJO), Rapaport explained that the reason lies in social changes, not market mechanisms. For Generation Z, according to the expert, natural diamonds are no longer as desirable as they once were. Furthermore, diamonds are a special product: the higher their price, the more people desire them. In summary, diamonds are part of what are known as Veblen goods: they are symbols of luxury, whose demand increases proportionally to the increase in price, contrary to what happens with everyday objects.
Another reason for the fall in diamond prices is the increase in the quantity of lab-created gems. China and India have flooded the market with synthetic diamonds, and the price of these gems is also falling drastically. Furthermore, the sale of synthetic diamonds has reduced the number of buyers of natural stones, especially in the low-end market segment. Therefore, this is another factor that has contributed to the decrease in demand for natural stones.
Actress Rosario Dawson wears Pandora Brilliance jewelry with lab-created diamonds, launched in August 2022 in the US and Canada.