Are Diamonds Losing Value? What the Market Says

Diamonds, historically seen as stable assets, are now subject to dynamic market forces that influence their pricing and consumer appeal. The market for diamonds, like any other commodity, is not static; it responds to changes in supply, demand, and broader economic conditions. Understanding these underlying market dynamics is increasingly important for those considering a diamond purchase or sale.

Current Market Dynamics

The diamond market has experienced a period of adjustment in recent years, with natural diamond prices softening from their peak levels seen during the pandemic era. Global diamond prices have plummeted 30% over the past three years. Despite these broader price corrections, recent data indicates a rebound in natural diamond sales. In July 2024, retail sales of natural diamonds climbed 8.5%, with average expenditure increasing by 5%.

Consumer purchasing habits show a nuanced picture. While overall jewelry sales in the U.S. saw an increase of 3.3% year-on-year in April 2025, natural diamond sales experienced a 5.6% decrease, largely due to a 9% drop in unit sales. However, natural diamond jewelry sales still saw a 7.6% increase in sales value in July 2024. Demand for larger natural diamonds appears to be a factor, with average expenditure on loose natural diamonds increasing by 5.7% year-over-year in July 2024.

Key Influences on Diamond Value

Several fundamental factors drive changes in diamond value. The interplay of supply and demand significantly impacts prices. Natural diamond prices surged between 2020 and 2023 due to supply shortages and inflation, but have softened in 2024 and 2025 as demand for lab-grown diamonds increased. Production cuts by major mining companies, such as De Beers, and geopolitical tensions can tighten the supply of natural diamonds, potentially pushing prices upward.

Global economic conditions also play a role, as consumer disposable income directly influences the demand for luxury goods like diamonds. Inflationary pressures have softened consumer spending, making retailers more cautious. Conversely, increasing disposable incomes in emerging markets, such as China and India, are projected to drive an 8% to 10% annual growth in demand for luxury diamonds.

The rise of lab-grown diamonds (LGDs) has become a transformative force in the market. LGDs are produced through processes like Chemical Vapor Deposition (CVD), which involves placing carbon seeds in a chamber and introducing gases that cause carbon atoms to crystallize around the seed. This manufacturing method allows for controlled production, leading to a significantly lower cost structure compared to natural diamonds. Lab-grown diamonds, which were only about 30% cheaper than natural diamonds in 2015, became 50-60% cheaper by 2020, and by 2025, they are approximately 80-85% more affordable than natural equivalents. This drastic price difference creates market pressure, as consumers seeking affordability can obtain larger, visually similar diamonds for a fraction of the cost of natural stones.

Assessing a Diamond’s Worth

The value of an individual diamond is primarily determined by a standardized set of characteristics known as the “4 Cs”: Carat, Cut, Color, and Clarity. Carat refers to the diamond’s weight, with prices increasing disproportionately at milestone weights like 1, 2, or 3 carats. Cut quality assesses how well a diamond’s facets interact with light, influencing its brilliance, fire, and sparkle. A well-cut diamond, even if of the same carat weight, will often appear larger and brighter than a poorly cut one.

Color grade evaluates the absence of color in white diamonds, ranging from D (colorless and most expensive) to Z (noticeable yellow or brown tint). Clarity measures the presence and visibility of internal inclusions and external blemishes, with higher clarity grades commanding higher prices. Independent gemological certifications from reputable laboratories like the Gemological Institute of America (GIA) or the American Gem Society (AGS) are crucial, as they provide an unbiased assessment of a diamond’s 4 Cs and confirm its authenticity.

What to Consider When Selling

Selling a diamond requires understanding the realities of the resale market, which often differs significantly from the retail environment where the diamond was originally purchased. The resale value of a diamond is typically lower than its initial retail price, largely due to substantial retail markups that cover overhead, marketing, and profit margins. The secondary market for used jewelry is not as robust or liquid as other asset markets, meaning there isn’t a readily available pool of buyers willing to pay close to retail prices for pre-owned items. Changing consumer preferences and evolving trends also influence the desirability and value of older diamond styles.

Various channels exist for selling a diamond, each with different pricing expectations and processes:
Local jewelers or consignment shops might offer 20% to 50% of the original retail price, providing convenience but often lower returns.
Pawn shops typically offer immediate cash, but their offers can be as low as 10% to 30% of the diamond’s wholesale value.
Online platforms specializing in pre-owned diamonds can reach a wider audience and potentially yield higher prices, though they may involve listing fees or commissions ranging from 10% to 25% of the sale price.
Auction houses are an option for rare or high-value diamonds, but they charge significant seller’s fees, typically 15% to 25% of the hammer price.
Preparing for a sale by having original documentation, such as a GIA or AGS certificate, or obtaining a recent appraisal, can help substantiate the diamond’s quality and value.