(IDEX Online) - After bottoming in September 2009 at 108.56, the IDEX Online Global Polished Price Index has risen almost every month since late last year. While price inflation momentum for polished diamonds slowed in September, it held relatively steady. The average price edged up 0.1 percent increase from August and 8.8 percent from the prior year to 118.1.

 

The graph below summarizes the diamond price index by month for the past two years. As the graph illustrates, prices have risen at a steady, consistent level, with modest pauses in July and September of this year.

 

 

Daily Price Action Tells Full Story

Unfortunately, the monthly average for polished diamond prices does not tell the full story for September. Polished diamond prices were robust at the beginning of the month, but lacked energy and momentum at the end of the month.

 

The graph below illustrates daily price movement for polished diamond prices during September 2010.

 

Source: IDEX Online

 

Month-to-Month Polished Diamond Prices Barely Ahead in September

The IDEX Online Global Polished Price Index averaged 118.1 in September, a very modest 0.1 percent increase over the August average of 117.9.

 

This was similar to the same paltry gain in July and far below the month-to-month gain in August of 0.5 percent. During an economic recovery cycle, there is often volatility in month-to-month indices such as the IDEX Online Polished Diamond Price Index as the economy lurches ahead at an uncertain pace.

 

The graph below illustrates month-to-month price changes for polished diamonds. The lack of price momentum is clear in July and September. Earlier this year, polished diamond prices rose consistently.

 

Source: IDEX Online

 

Year-to-Year Polished Diamond Prices Up Due to Easy Comparisons

The IDEX Online Global Polished Diamond Price Index for September 2010 – 118.1 – was a strong 8.8 percent higher than the average for September 2009.

 

September was the eighth consecutive month that prices have risen on a year-to-year basis; further, the September price gain was the largest this year as the graph below illustrates, and it was the greatest gain since October 2008. However, it is important to note that the low point in the IDEX Online Polished Diamond Price Index occurred in September 2009; thus, comparisons this year were very easy against last year’s low point.

 

Source: IDEX Online

 

Diamond Prices by Size Were Mixed in September

During September, price action was mixed by diamond size. A few diamond sizes posted a modest price increase, while others posted a notable decrease on a month-to-month basis.

 

The graph below illustrates the strength and weakness in prices among the various carat diamonds during September 2010, when compared to the prior month.

Source: IDEX Online

Year-over-year prices for polished diamonds by size continue to increase, with large price gains for three-carat stones. Four and five carat diamonds have shown slightly more modest price increases than smaller stones, as the graph below illustrates.

 

However, it is important to note that the polished diamond price comparisons in September 2010 are against the lowest point that the IDEX Online Polished Diamond Price Index hit during the recession. Thus, we would expect solid percentage gains, since comparisons against last year are easy.

 

“Snapshot” graphs of a single month are less meaningful than overall trends; diamantaires should look at the longer term movement of the IDEX Online Global Polished Diamond Price Index which illustrates that polished diamond prices are moving broadly higher, despite pauses in July and September.

Source: IDEX Online

The graph below summarizes three years of price movement of polished diamonds by various key sizes.

 

Source: IDEX Online

 

IDEX Online Index Summary Table

The table below summarizes the IDEX Online Index by month for the past three years.

 

Source: IDEX Online

 

Outlook: Polished Diamond Prices Will Continue To Rise

We believe that polished diamond prices will continue to rise from current levels, though at a more modest rate. Until fundamental demand from consumers shows solid gains, price increases will likely be choppy.