Diamond Prices to Stagnate in 2012 on Euro Crisis, BMO Forecasts

Rough diamond prices are set to remain at current levels for the rest of the year as the European debt crisis saps demand, BMO Capital Markets forecast.

“Ongoing uncertainty related to the euro-zone debt crisis and the sustainability of economic growth in other parts of the world may weigh on sentiment in the rough diamond market,” analyst Ed Sterck wrote in a report. “BMO Research expects rough diamond prices to remain at current levels for the remainder of 2012.”

Rough diamond prices have slipped 2 percent so far this year, according to data compiled by WWW International Diamond Consultants Ltd. Prices have risen by more than 20 percent in each of the past three years as producers struggled to keep pace with consumption.

The mid-to-long-term outlook for diamonds remains “positive,” BMO said as constrained output will struggle to match growing demand for the precious stones. BMO forecast that diamond prices will gain 3 percent next year and rise 5 percent to 7 percent in the following years.

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