ABN AMRO predicted polished diamond prices will increase next year as it expects improved economic conditions to boost U.S. and Chinese demand.
U.S. jewelry consumption will grow amid a stronger labor market and rising housing prices, the Amsterdam-based bank argued in a report about the diamond market. President-Elect Donald Trump’s anticipated tax cuts together with higher infrastructure and defense spending will play a central role in boosting economic growth in the U.S., which accounts for 30 percent to 40 percent of global diamond jewelry demand, the report said.
ABN AMRO’s prediction comes as polished prices have declined this year, with the RapNet Diamond Index (RAPI™) for 1-carat polished diamonds dropping 4.2 percent in the first 10 months of this year.
“The overall diamond price index is in the process of bottoming out,” the report said, pointing out that the pace of retreat in polished prices has slowed. “We expect demand for polished diamonds to pick up in 2017, driven by an improvement in U.S. and Chinese jewelry demand.”
ABN AMRO raised its forecast for China’s economic growth to 6.5 percent from 6 percent. “Against this more constructive outlook, we expect the Chinese middle class to grow and diamond jewelry demand to rise over time,” the bank projected.