LIKE MOST PEOPLE across the globe, I’m relieved to see 2020 in the rearview mirror. With a worldwide pandemic, a wild U.S. election and an economic slowdown, it was one of the most trying years in recent history. Now that we’ve ushered in 2021, customers are consistently asking what we can expect in the next six months. Here are my top predictions for the diamond industry this year.
Natural Diamond Prices Will Continue to Climb
We saw diamond prices climb for the holiday season, and while we usually see them hold steady or drop off in Q1, I think we’ll actually see an increase of approximately 5% increase over the next six months.
Why? It’s simply the law of supply and demand. COVID-19 brought about widespread manufacturing shutdowns in India — home to 60% of the diamond cutting and polishing business worldwide — only to reopen at reduced capacities, continuing to slow production of polished and cut diamonds, which requires a great deal of manpower.
The supply and demand rule also applies to lab-grown diamonds, but in the opposite way. China, the leading producer of lab-grown diamonds, has flooded the market, and as a result, lab-grown diamonds have decreased in price by 50 percent since their inception. I believe prices will continue to fall by 10-15 percent over the next 12 months.
Consumer Spending Will Go Up
In spite of record-high unemployment rates and an economic slow-down, consumer spending on diamonds will continue to uptick. Throughout the pandemic, diamond sales increased — those consumers with discretionary income spent money on diamonds and fine jewelry in lieu of vacations, entertainment and dining out. We also saw engagements increase along with the purchases of bigger, better diamond anniversary bands. This will continue for at least the first half of 2021.
The Vaccine Effect
Like nearly every industry, a return to normal will happen when COVID-19 is controlled. At that time, I predict diamond manufacturers will go back to full capacity, helping to mitigate the supply issue and thus, we’ll see prices begin to stabilize.
As vaccines continue to roll out, we’ll also see in-store traffic finally reach pre-pandemic levels again. It will be important that jewelers are ready to capitalize on that traffic with what I expect will be this year’s top sellers, including:
- Simplified, dainty settings are trending.
- Yellow gold is experiencing a resurgence and currently accounts for 20% of the market.
- Oval cut is the hottest of-the-moment fancy diamond shape.
- Round brilliant cut diamonds are consistently the most popular, and thus will always be in high demand.
- Nationally, we see a buying pattern of SI1s, SI2s, and I1s and colors ranging F to J.
- Diamond studs are always a sure bet because they sell year-round and are timeless pieces that never go out of style.
All in all, for jewelers and consumers alike, I predict better days ahead!