An improving American economy should drive a change in fortunes for the diamond market, with City broker Panmure Gordon tipping demand to pick up.
In a note entitled “A Diamond is Forever, but Especially for this Christmas”, Panmure’s Alison Turner makes a strong case for investing in diamonds.
Unlike other commodities, the US rather than China dominates the diamond market by some distance, with 37% of last year’s demand.
“With that economy steadily improving we expect a rebound in diamond demand,” said Turner.
“Polished prices could see an uplift ahead of the key Thanksgiving and Christmas season.”
She adds that while some investors may be concerned about a slowdown in China, the outlook for diamonds remains positive “driven by rebalancing of the economy from investment to consumption and favourable demographic and diamond buying trends”.
Turner recommends looking at Petra Diamonds (LON:PDL) in the mid cap space, while Gem Diamonds (LON:GEMD) offers long-term upside, she reckons.
Her comments come after a report from Rapaport suggests that sentiment is improving towards diamonds despite subdued buying at recent shows in Las Vegas.
Diamond prices in most sizes have been stable in the first five months of the year, while 0.30-carat stones increased by almost 9% on rising Far East demand for these goods.