The shortage of supply in better end and larger polished is spurring strong demand, but a persistent stream of negative news from the United States is causing violent mood swings in the polished market. Positive factors are that cutting centre stocks are said to be on the lower side and that traders are citing a limited availability in certain goods. In India, polished price levels are reportedly moving upwards very fast, although there appears to be some resistance elsewhere to follow India's bullish increases. Chinese demand is still growing, although as the build up in purchases in anticipation of the Chinese New Year eases demand is expected to weaken in the region in the next few weeks. But even a slight slowdown in the US - still by far biggest market for polished - will affect the diamond market. There are signs that this is already happening. Traders and jewellery manufacturers are reporting late payments from the US. Friedman's, the troubled US retailer, faced pressure this week to file for Chapter 7 bankruptcy. While several bankruptcies have been reported in the US wholesale trade over the past few weeks. Traders will be looking at the level of returned merchandise in the weeks ahead for more clarity on a possible build up in inventory that inevitably will cause pressure on prices. Meanwhile, the overall PolishedPrices Index ended the week higher at 132.2 points on Friday after opening at 131.6 points on Monday. Mixed qualities were the weakest performers on the index, with 1 carat, 0.5 carats and 0.3 carats Mixed all starting the week in negative territory.

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