Oddly, while the global economy has to survive soaring inflation, diamonds are rapidly losing value. Common sense suggests that precious gems could become a shelter for investors in turbulent times. In practice, the dynamics of financial markets frequently defy expectations. On the back of geopolitical challenges, the first half of 2023 was tough for the diamond market. According to the Global Rough Diamond Price Index from Paul Zimnisky Diamond Analytics, world diamond prices tumbled by 13.8% in the last 12 months. The steady downtrend has been unfolding since the price reached its historic peak in February 2022. Since that time, the price has slumped by 18.4%. Besides, diamonds have depreciated by 6.5% since early January 2023.  “A slightly better-than-average-quality 1-carat natural diamond was $6,700 a year ago, today this same diamond is selling for $5,300,” Paul Zimnisky, the CEO of Paul Zimnisky Diamond Analytics, told CNBC.

Market watchers explain that diamond prices are currently driven by totally different fundamentals compared to a year ago. Ankur Daga, head of the American jewelry and jewelry chain Angara Jewelry, said that diamonds, alongside other jewelry, saw elevated prices amid buoyant demand during the Covid-19 pandemic. "When people can't travel or go to restaurants, they spend their money to buy luxury goods and jewelry," Ankur Daga pointed out. He added that when economies began to "open up" after Covid restrictions, consumers shifted their focus back to previous purchases. So, diamond prices went into a downward spiral. Nowadays, even sanctions against Russia, the world’s largest diamond producer, will hardly encourage prices to grow. Edahn Golan, CEO of Edahn Golan Diamond Research & Data, reckons that Russia will face no trouble selling its diamonds despite the sanctions. “Countries like India, UAE, and even the EU, didn’t place sanctions on rough diamond imports. So again, no real shortages,” he said.