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Diamonds are feeling the pinch along with other commodities, but the future looks brighter…

by , 13 October 2015

Over the past few years, few commodities have performed well. China bears the brunt for this as its slowing economy demands less raw materials.

And diamonds are no exception. Their price is also under pressure.

So what's going on with diamonds? And what does the future hold for these gems?

Read on to find out more…

What’s happening with diamonds?

This year alone, the price of rough diamonds is down 14%. This has led De Beers, which is behind nearly a third of the world’s supply, to cut output twice over the past few months.

To deal with lagging prices and appeal, De Beers has also poured more money into advertising, Thomas Biesheuvel in Bloomberg explains. And in an attempt to attract buyers, the diamond producer has cut prices by 10%.

What’s putting pressure on the price of diamonds?

It’s all down to what’s going on in China, Helen Thomas explains in The Wall Street Journal. China is the second largest consumer of diamonds in the world. Analysts predict that over the next few years this will fall to around 20% of consumer demand.

There are also other reasons behind the demise of the price of diamonds…

A stronger dollar means that diamonds are more expensive to buy in Asia and Europe, which is also impacting demand.

And with the prices of polished stones falling, diamond cutters don’t want to buy rough diamonds as they worry about margins and profits, say the experts at Money Week.

The future for diamonds

But the future for diamonds looks better.

As Helen Thomas points out, the future is looking more promising as the number of mines starting up is small over the next few years. Plus as emerging markets becoming increasingly wealthy, this is good news for diamonds.

But for the moment, as with so many other commodities, the price of diamonds remain under pressure.

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Diamonds are feeling the pinch along with other commodities, but the future looks brighter…
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