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DIAMOND MARKET OVERVIEW

Concerns in the Commercial and cheaper areas of polished are growing as the US slowdown is causing liquidations and liquidity is getting tighter. Several factors suggest more price pressure is expected in this segment. Some players have said the uncertainty in the financial markets is holding off trading activity in these areas of polished as banks have become more stringent in their lending. In India some traders said many players have begun pulling out of buying and selling Commercial polished, investing instead in more profitable sectors such as India’s booming retail market, which is tapping liquidity out of the market. There are reports that retailers in the US are melting jewellery and selling the gold to benefit from soaring prices in the precious metal. So the traditional returns after the season may appear understated as diamonds in the jewellery that is affected – mainly Commercial I1, 2 and 3 - are sold back into the wholesale market causing a ripple that traders believe will put further pressure on prices. Manufacturers in India are saying there is still enough stock in cheaper goods to keep the factories running. Hence, the market could see more discounting in Commercial and cheaper goods, especially with the tight liquidity situation being reported. However, in smaller Fines and larger sizes, in particular the better end, the driving forces are completely different with tight supplies and strong demand suggesting a continuation of the upward trend. The overall PolishedPrices index ended the week lower at 129.1 points after opening at 130.6 points on Monday. Fine smalls continued their volatile path with 0.3 carats falling 11.3% after opening 6.4% higher the previous week. Mixed quality one carat, also continued to trade erratically, gaining 14.3% after losing 11.5% the week before in heavy trading volumes.





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