Falling gold prices revive physical demand in key markets
Consumers in price sensitive regions such as India had been finding it difficult to cope with gold's rally in recent months.
Russia’s Alrosa (MCX:ALRS), the world’s top diamond producer by output in carats, injected some fresh good news into the gems market by announcing it sold 60% more gems last month than it did in January 2016.
The company sold $358 million in rough diamonds and $7.28 million in polished precious rocks.
Alrosa says the Indian diamond cutting sector has coped with the problems caused by the recent currency reform faster than expected.
Alrosa’s vice president, Yury Okoemov, said that while the Indian diamond cutting sector has clearly coped with the problems caused by the currency reform faster than expected, his company is only cautiously optimistic about the outlook for small-size, low-cost rough diamonds.
His comments echo De Beer’s views. Despite its record-breaking sales last month, the Anglo American unit — the world’s top diamond producer by value — said it maintained its cautious stance on such diamonds.
About 80% of the world’s diamonds are cut and polished in India by players who normally pay for their rocks upfront and sell on credit. But with Prime Minister Narendra Modi’s 500- and 1,000-rupee notes withdrawal, diamond producers feared that link in the industry would get weaker, affecting demand for that segment.
India is the third-largest diamond jewellery market behind the US and China, accounting for about 8% of global demand.
