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DIAMOND MARKET OVERVIEW

Overall diamonds have fared poorly in comparison to other precious metals, such as gold, silver and platinum. This week gold soared above $955 an ounce- the highest level ever. Silver rallied to its highest level since November 1980 this week and platinum hovered below last week's record. By segment however, bigger sizes in rough and polished have been on a similar upward trend reaching record prices, in particular in the higher colours. Jewellers in this luxury segment of the diamond market appear to shrug off worries about the state of the biggest market for polished sales – the US. There is also buying from speculators, who believe there is room for further price increases. Active buying in smaller fine quality diamonds is also strong and world production shortages in these ranges will continue to support the upward price trend. In the broader market, trading has been on the slow side over the past two weeks ahead of trade shows in Thailand and Hong Kong. The trade is waiting for indications on demand for diamond jewellery after the Hong Kong trade Fair at the end of next week. Antwerp on the other hand is seeing heavy inter-dealer trading, and some players are raising concerns about speculative buying in large goods. Indian demand is steady, but traders say a significant amount of liquidity has been sucked out of the market due to stock market losses. In the cheaper end, the beginning of the years saw strong buying by Indian manufacturers to feed the factories, while some dealers took advantage of the factory demand and bought heavily, driving up prices. The factories in India, where there are said to be about 150,000 fewer cutters being employed, are reportedly well stocked for at least a month or longer, depending on how severe the problems are in the US. Continuing reports of bankruptcies and delayed or even non payments has rocked the market and is forcing major restructuring. Some traders said the US situation has prompted selling of inventory at discounts, and there are even suggestions of this starting to happen in larger, high-end goods. Although the level of returns from the US in Commercial and cheaper polished are reportedly not alarming. Meanwhile, the overall index traded in tight ranges over the past week ending virtually unchanged at 131.6 points on Friday in slightly lower volumes compared to the previous week.





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