Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

In the post-Brexit world, it seems that diamonds don't have a lot of best friends.

The biggest rough-cut stone found in more than 100 years failed to sell at an auction in London this week. Buyers balked at the price tag, that was at least $70 million. The highest bid was $61 million.

It looks like the culprit is the fallout from the referendum vote. Lucara Diamond Corp. priced the 1,109-carat rough stone in dollars, but global currency volatility after the referendum vote pushed the already-premium price tag a touch higher for anyone buying in euros, and astronomically higher for anyone buying in pounds.

From the perspective of the close-knit diamond market, it's a surprising result. Finds as large and rare as this are usually more resilient than their smaller counterparts to softness in demand. And that had already been tailing off, with prices for rough diamonds dropping 18 percent last year, the worst performance since the financial crisis in 2008.

Wishful Thinking
Valuations of luxury groups look optimistic given the volatility created by Britain's vote to leave the EU
Source: Bloomberg Intelligence

Setting aside the referendum result, there was perhaps reason for broader caution about this sale. Affluent consumers around the world already had reason to start reining in purchases -- chief among these are the Chinese crackdown on conspicuous consumption and questions about the U.S. election.

The fact that this super-size stone failed to sell sends a worrying signal. It looks like even ultra high net worth individuals are being cautious, That has far-reaching implications for sales of everything from houses to handbags -- if the superrich are pulling back even a bit, it's not a good sign for everyone else.

The retrenchment of the wealthy isn't happening across the board. Sotheby's also sold 52.2 million pounds ($70.2 million) of art in London this week, as Asian and U.S. collectors took advantage of the favorable exchange rate.

Rough Ride for Uncut Diamonds
2016's rebound from the worst year since the financial crisis may have hit a speedbump

But the failed diamond sale provides another reason to be fearful for global luxury groups. Growth in personal luxury items may be just 2 percent, or even nonexistent this year, according to a joint report from consultancy Bain and Italian luxury association Altagamma. That compares with a compound annual growth rate of 6 percent between between 1995 and 2015.

This forecast might now prove too optimistic, particularly if very high net worth individuals start to reconsider their purchases of handbags or watches that cost hundreds of thousands of dollars.

The forward price earnings ratio of the Bloomberg Intelligence Luxury Peer Group had recovered slightly against the MSCI World Index. That now looks tenuous.

It's not just diamonds that are losing their luster.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Andrea Felsted in London at

To contact the editor responsible for this story:
Jennifer Ryan at