The global diamond market, a complex ecosystem driven by sentiment, economics, and geopolitics, showed tentative signs of finding a floor in January. After a period of significant volatility, the decline in polished diamond prices became more moderate, offering a glimmer of stability to an industry grappling with multifaceted challenges.

This analysis unpacks the latest data, explores the underlying forces at play, and examines the road ahead for traders, jewelers, and consumers.

January 2026: The Slowdown in Price Declines

The most recent data from the RapNet Diamond Index (RAPI™), a key industry benchmark, indicates a deceleration in price drops across key categories. The RAPI, which tracks the most liquid segment of the market (round, D-H, IF-VS2 diamonds), fell by a modest 1.3% in January for both 0.30-carat and 1-carat diamonds.

This follows steeper declines of 6.3% and 4.7% respectively in the previous two months, suggesting the precipitous fall may be easing.

Notably, the market exhibited a clear bifurcation:

Size Matters: Diamonds over 1.20 carats generally outperformed smaller stones, which had borne the brunt of the 2023 corrections. The 3-carat category, however, saw a 1.6% slide after a period of stability.

Geographic Divergence: The US market showed relative strength compared to India, where high gold prices dampened local jewelry demand. European buyers displayed interest in larger, statement stones (5 carats and above).

This price moderation, while welcome, occurs within a context of pervasive buyer caution. Uncertainty persists due to macroeconomic pressures, geopolitical tensions, and the ongoing impact of tariffs.

Deconstructing the Market Forces:

Several interconnected factors are shaping the current diamond landscape:

The US Tariff Impact and the India Trade Deal: US tariffs have been a significant headwind, limiting access to the world's most important retail diamond market. In a crucial development, a trade deal reached between the US and India on February 2 promises to cut India's tariff rate on polished diamonds from 50% to 18%, with potential for full exemption.

This deal, highlighted in reports from the World Trade Organization (WTO), has provided a immediate boost to market sentiment and could improve the flow of goods to the US. For businesses looking to navigate this changing trade landscape, a platform like CaratX's B2B Marketplace can be instrumental in connecting with international buyers.

Rough Diamond Dynamics: Major producers are adjusting to market conditions. De Beers' decision to reduce rough diamond prices at its January sight was a double-edged sword. While it alleviated pressure on manufacturers' margins, it raised concerns about a potential influx of lower-cost polished goods into an already soft market.

This follows the 2023 trend where increased supply of lower-value rough from sources like Angola and Russia contributed significantly to the weakness in polished diamonds under 1 carat.

The Structural Challenge of Lab-Grown Diamonds: The rise of synthetic diamonds is not a cyclical trend but a permanent structural shift.

As studies from institutions like the Gemological Institute of America (GIA) outline, the technological advancement and lower production costs of lab-grown stones have created a parallel market, siphoning demand, particularly in the entry-level and fashion jewelry segments.

This has permanently lowered the demand trajectory for certain categories of natural diamonds.

China's prolonged economic slowdown continues to affect luxury spending. Furthermore, social changes in key markets, including declining marriage rates in the West and Japan. Simultaneously, the recent spike in gold and silver prices, despite a correction, has squeezed consumer disposable income for other luxury goods.

The Path Forward:

A swift, V-shaped recovery in diamond prices is unlikely. The industry's path forward hinges on adaptation.

Short-Term: The market's ability to "right-size" by aligning inventory with realistic demand will be critical. This may involve continued promotional activity at retail and strategic sourcing by manufacturers.

Medium-Term: Success will belong to those who leverage efficient distribution channels and connect directly with demand pockets.

Platforms that facilitate global trade, such as CaratX, which allows sellers to reach buyers in 18+ international countries, are becoming vital tools for resilience.

Long-Term: The narrative for natural diamonds must evolve beyond carat weight alone, emphasizing provenance, rarity, and emotional value to differentiate from synthetics.

For those seeking exceptional natural stones, exploring a curated selection like the natural diamonds collection at CaratX can offer access to a vetted inventory.

For jewelers and retailers, this environment underscores the importance of diversification. Incorporating colored gemstones available at competitive prices on marketplaces like CaratX's gemstone section or launching exclusive jewelry lines can capture new customer segments. Sellers can explore this by leveraging a CaratX Seller Plan to sell jewelry internationally.

Frequently Asked Questions (FAQs)

Q1: Are diamond prices expected to fall further in 2024? A: While January showed moderation, the market remains fragile. Prices for smaller goods may see further pressure, but the new US-India trade deal and controlled rough supply could stabilize the mid-size and larger diamond categories. Much depends on global consumer confidence.

Q2: How are lab-grown diamonds affecting the entire market? A: They have created a definitive lower price tier, compressing margins for natural diamonds in similar size and quality ranges (especially under 2 carats). This has forced the natural diamond industry to better communicate its value proposition around uniqueness and longevity.

Q3: Is now a good time to buy a diamond? A: For consumers, the current period of price moderation and high inventory can present opportunities for value, particularly if working with a reputable seller. Comparing certified stones across platforms, including online marketplaces like CaratX, is advisable.

Q4: What can diamond sellers do to survive in this market? A: Sellers must optimize efficiency, expand their geographic reach, and diversify offerings. Registering on global B2B platforms, considering branded jewelry, or offering a range of products are key strategies. Sellers can register on CaratX here to start accessing a wider buyer base immediately.

Q5: Where can I find reliable data on diamond price trends? A: The RapNet Diamond Index (RAPI) is a industry standard. Authoritative reports from institutions like the GIA and trade publications provide essential context for this data.

Sources and Citations:

Rapaport Group. (2024, February). RapNet Diamond Index (RAPI) – January 2026 Report.

World Trade Organization. (2023). International Trade and Market Access. Retrieved from https://www.wto.org

Gemological Institute of America. (2023). Lab-Grown Diamond Insights Report. Retrieved from https://www.gia.edu

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