Polished Diamond Price Inflation Shows Dramatic Rise in April

Energy prices continue to spike; food costs are higher; clothing prices are up. Global prices of virtually all goods are on the rise, and inflation is the main topic in news headlines around the world. So it should be no surprise that polished diamond prices are also caught up in this inflation frenzy.

The economy of the U.S., which represents just less than 30 percent of the global economy and about 50 percent of global diamond consumption, appears to be mired in a recessionary mode, there is no shortage of demand for high quality polished diamonds in other world markets. Diamond buyers in Asia, the Middle East, India and China have stepped in, and they are bidding up prices, especially among the larger stones – three carats and above.

A common question today, will these diamond price increase hold at retail, or will merchants negotiate them down? – appears to have been answered. Because of strong demand for polished diamonds in other global markets, diamond suppliers have been able to maintain their price increases. If a U.S. customer bulks at paying higher prices for diamonds, the diamond supplier simply moves on to another market where demand is strong.

As long as the demand for diamonds and diamond jewelry remains strong, especially in emerging markets, prices are expected to rise. Further, since rough diamond prices have been rising faster than polished diamond prices, there is on-going pressure to pass along those price increases. So far this year, rough diamond prices are up about 8.5 percent based on results of DTC Sights; polished prices are up by just over 6 percent since the end of 2007.

While diamond prices showed a dramatic increase in April based on comparisons of the average prices for the month, the real spike in diamond prices occurred in March.In March, there was a sharp spike mid-month, and those higher prices carried over into April.However, while prices were at record levels in April, they were relatively flat throughout the month. The market was apparently digesting the price spike which occurred in March; many suppliers were waiting to see if prices would hold firm. They were rewarded for their patience: prices were steady in April.

Because rough diamond prices are rising at a pace faster than polished diamond prices, there is much pressure on cutters and polishers to raise their prices, a trend that is likely to continue. This will keep polished diamond prices from falling, and should provide support, along with baseline consumer demand, to send prices higher, but at a more moderate rate.

Gold weakens on U.S. dollar rise

LONDON — Gold ended sharply lower after hitting a three-month bottom Tuesday on the back of a firmer U.S. dollar, declining oil prices and weak sentiment ahead of an interest rate decision by the U.S. Federal Reserve Board.

Gold often takes its cue from movements in the dollar because of its role as an alternative investment to currencies, stocks and bonds. The outcome of the Fed meeting would set the tone for currencies and precious metals, dealers said.

“Strength in the U.S. dollar is clearly a major factor, plus we have seen a quite bit of money coming out of the StreetTracks exchange-traded fund. Both these things are weighing on the market,” said Dan Smith, analyst at Standard Chartered Bank.

“There is some indication of consumers starting to come back in at these lower prices, but we are waiting to see how powerful that would be. I am looking for prices to recover somewhat from where we are now,” he said.

Gold held in StreetTracks Gold Shares, the world's largest gold-backed ETF, fell more than 50 tonnes in less than a week to about 591 tonnes as of Monday.

Spot gold fell as low as $868.80 (U.S.) an ounce, the lowest price level since Jan 22.

It was at $873.55/874.75 at 2:15 p.m. EDT, against $891.65/892.65 late in New York on Monday, when it hit an intraday day high of $895.50 on speculative buying driven by record high oil.

Jonathan Jossen, an independent floor trader in New York, said that gold's fundamentals remain firm in spite of a recent selloff due to the U.S. dollar's strength.

“The only thing that I can see why gold should slip is that we get deeper into a recession, and maybe that will bring commodity prices down and bring inflation down,” Mr. Jossen said.

The dollar hit its highest level against the euro in nearly four weeks, on track for its largest monthly gain in nearly a year, amid expectations the Federal Reserve will signal the end of its easing campaign.

The Fed will begin its two-day meeting later on Tuesday and analysts expect the policy-setting body to cut key borrowing costs by a quarter percentage point to 2 per cent and indicate that its rate-cutting campaign is finished for now.

A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

Oil fell more than $3 a barrel, retreating further from a record high hit on Monday. U.S. crude futures ended down $3.12 at $115.36 a barrel.

George Gero, vice-president with RBC Capital Markets Global Futures in New York, said that the Fed meeting will be closely watched.

Mr. Gero also cited a lower open interest in the U.S. gold futures market, larger gold delivery notices and chart-based selling below $880 an ounce for bullion's drop.

Spot gold has been trading well below its lifetime high of $1,030.80 an ounce hit on March 17, with attempts to revisit the level resulted in heavy profit-taking by investors.

U.S. gold futures for June delivery on the Comex division of the New York Mercantile Exchange settled down $18.70, or 2.1 per cent, at $876.80 an ounce Tuesday.

In industry news, Penoles, Mexico's largest producer of refined silver, declined sharply on Tuesday, falling 6 per cent one day after the company posted a slight drop in first-quarter net profit.

Silver fell to $16.48/16.57 from $16.96/17.02 an ounce late in New York on Monday.
Other precious metals also fell, with spot platinum dropped sharply to $1,909.50/1,929.50 an ounce from $1,964.50/1,974.50, while palladium dropped to $419/427 an ounce from $432.50/438.50 in the U.S. market late on Monday.

Hadar Company Founder Weighs In on Skyrocketing Metal Prices

Today, Hadar is a worldwide supplier of Russian Brilliants, natural diamonds and synthetic stones and was founded in the year 2000.The Company specializes in ideal cut stones and has clients on five continents. Hadar is a full service jewelry provider, offering custom designs, contract manufacturing and jewelry repair services, all at competitive prices.

Gerry Hauser, founder of Hadar Company, advises consumers to buy jewelry only made in the U.S. these days, in light of skyrocketing precious metal prices. In addition to being founder and president of Hadar Company, Hauser also co-founded La Jolla Diamond Co. and Heritage Estate Buyers, Inc. and is recognized as an authority on diamonds and diamond simulants.

"The price for gold continues to climb to new highs, increasing from $600 to $985 an ounce," says Hauser, "and platinum values have risen from $1,100 to $2,260 -- all in the past year. Price proliferations are fueled by international demand for jewelry and investors hedging against inflation."

To compensate for the higher metal prices, Hauser says many competing companies sell rings manufactured in China. Most 14KW rings are high polished nickel over white gold and 'flash' rhodium plated. Initially, the ring will appear very shiny. This appeal can last for three to six months. Hauser says nickel over white gold can produce an allergic reaction and can potentially cause lung damage.

"These rings are outlawed for sale in most of Europe," says Hauser. "Sizing is another issue. Flame used in sizing burns the nickel. The ring will turn black. Some platinum rings manufactured in China have hollow sections or are platinum plated over silver."

Hadar continues to offer engagement rings and other jewelry items manufactured only in the U.S. Hadar does not compromise quality to compensate for the rising cost of gold and platinum. In the previous twelve months, Hadar cut internal costs to maintain stable pricing.

To further aid consumers, Hadar has implemented an Easy Pay Plan. The Easy Pay Plan allows consumers to lock in the price at the time of purchase. Buyers will not pay more because of increased metal prices. Consumers can purchase loose stones or jewelry set in the metal of their choice with a 20% deposit / monthly payments / no interest / no credit checks. Now customers can design their own ring and payment plan. For more information, please visit http://www.russianbrilliants.net/ and http://www.hadardiamonds.com/.