Consumers Choose Traveling And Food, Diamond Prices Drop Post-pandemic

Diamond illustration. (Wikimedia Commons/StrangerThanKindness)

JAKARTA - The price of rough diamonds, which are still in the form of raw stones, unpolled and uncut, has decreased this year, because consumers choose to avoid luxury goods after the COVID-19 pandemic.

According to Zimnisky Global Rough Diamond Index, prices are the lowest in a year. Meanwhile, industry analysts attributed this slump to a decline in sales at jewelry stores.

When consumers spend less money on eating and traveling during the COVID-19 pandemic, "people have excess money to spend on discretionable purchases," said Paul Zimnisky, a global diamond analyst, quoted by CNN, October 15.

The price of diamonds is adjusted, when consumers choose services over jewelry. According to analysts, people prefer to eat outside, travel and spend money on buying experiences over luxury items.

"Berlian is a fully consumer-driven market," said Edahn Golan, an independent diamond analyst.

The buyer's demand for diamond jewelry affects the rough price of diamonds and, to some extent, retail prices. The retailer increased consumer demand by pouring hundreds of millions of dollars into advertising.

The decline in the price of diamonds occurred after two years of breaking record sales of rough diamonds. In 2021 and 2022, demand for rough diamond jewelry is at an all-time high.

"There was a parabola move upwards, and now there is a correction on the other side," Zimnisky said.

However, the decline in rough diamond prices does not mean that buyers will see cheaper price labels in stores.

It is said that retailers usually do not adjust prices in their stores based on the condition of the diamond market in the short term, regardless of whether their products are cheaper or more expensive.

"Retailers set certain prices, and they are very protective of their dirty margins," according.

"Although the price of rough diamonds is falling, buying one carat round diamonds in shops is currently an average of 3 percent more expensive than in January 2020," he said.

"In the short term, if wholesale prices drop, some jewelry manufacturers will try to take this opportunity to get more margins," Zimnisky explained.

Even so, industry analysts expect a spike in retail sales during the winter holidays and early 2024.

It is known that winter months are the peak of engagement seasons, while Christmas and Valentine's Day are usually a profitable holiday for jewelry companies.

While this may lead to a small spike in rough diamond prices, "Overall, we will see a decline in sales from year to year in the holiday season," predicts David Johnson, spokesman for De Beers, one of the world's largest diamond companies.

Zimnisky also expects a market weakening this year compared to the peaks of 2021 and 2022, but he said economic indicators in the United States are quite promising. "The stock market has relatively good performance and strong employment opportunities," he said, paving the way for the gradual recovery of rough diamond prices by 2024.