Just like love, the diamond industry is characterized by dizzying highs and devastating lows.

After an initial pandemic-related decline in 2020, the overall business is “enjoying an amazing rebound,” according to Bain & Company’s Global Diamond Report released in February.

The study found that during 2021, revenue in the mining sector increased by 62%, grinding and polishing increased by 55%, and diamond jewelry retail sales grew by 29%.

By the end of last year, prices for both rough and finished products were almost back to pre-pandemic levels and historical averages, although analysts noted that those figures were “still below all-time highs,” the report said. Meanwhile, the personal luxury goods market rose 35%.

Bain attributes “decades of growth” in the personal luxury and diamond jewelry categories to several factors. On the one hand, “diamond jewelry sales rebounded as Covid-19 restrictions eased and opportunities for the consumer experience remained slim,” the report said. “Sales were also boosted by a recovery in marketing and wedding demand.

This is certainly good news for stores that specialize in diamond wedding jewelry, as prices in this category are currently healthy. The average cost of an engagement ring in the U.S. is $6,000, according to The Knot 2021 Jewelry and Engagement Study, published late last year on the wedding site of the same name.

But that number varies by region, it noted: the mid-Atlantic has the highest average spend at $7,900, while the midwest has the lowest at $5,200. Average costs in New England, the southwest, and the southeast are $7,400, $5,500, and $5,300, respectively.

In terms of size, the study shows that the average diamond ring is 1.50 carats. While about half of all engagement rings weigh between 1 and 2 carats, 25 percent weigh more than 2 carats. Some couples choose diamond alternatives to keep costs down, the report said; about a third of respondents spend between $1,000 and $4,000 on a ring, while 8 percent spend less than $1,000.

Natural attraction

Industry analyst Paul Zimnisky corroborated the data from The Knot study. His own research found that the average price of an engagement ring today is between $4,000 and $8,000.

Natural diamonds in particular can be at the higher end of the range,” Zimnisky said, adding that natural diamond clients typically want rings larger than 1 carat, and older buyers spend more than younger buyers. He expects prices in the category to remain stable, at least temporarily.

The price of natural diamonds has been relatively stable over the past few months. If the holiday season is good, we will definitely see higher prices in the first quarter of 2023,” he predicted.

This year, customers are still using the money they’ve saved during the pandemic to buy diamonds, probably more than they would otherwise,” he continued. “However, over time, customers seem to be stalling the purchase process— — so the same money might be spent, but the urge to buy seems to be less.

US demand remains constant

During the pandemic, diamond ring prices have risen at New York-based jeweler The Clear Cut, which specializes in mined gemstones.

Our average order value for engagement rings has increased by 27% since 2020,” said co-founder and CEO Olivia Landau. “We’re seeing the biggest price increases for medium-quality round brilliants.

Nearly three years after the outbreak, the small diamond market has softened, said Sandy Ip, founder and designer of Hong Kong jewelry brand Sevun. High prices are a factor, but prices are stabilizing, she believes.

Diamond prices went up in 2020 and 2021, but the rise of prices has stopped in recent months,” she says, adding that US demand remains constant.

Globally, “due to inflation and a possible economic slowdown, we see slower demand in diamonds below 2 carats. Demand for 3 carats and above seems steady,” she adds, noting that most of her clients won’t go below 1 carat.

What do you fancy?

But size isn’t the most important factor in engagement rings, according to The Knot; most couples are more interested in the cut and shape. In fact, the group says 41% of all engagement rings that sold in 2021 were round-cut diamonds, and white gold continues to be the most popular metal setting at 45%. Yellow gold comes in second at 20%.

Ip has found that “fancy-cut diamond engagement rings between 2 and 3 carats continue to be popular. Oval is the most popular, followed by radiant, emerald, pear and cushion cuts.

Zimnisky has noticed pear and emerald cuts drawing attention. In addition, he observes, custom is still king — a trend that “is likely to continue, as customers want something different.

Forward thinking

Having predicted a continuing rise in demand for diamond jewelry — as well as polished and rough loose diamonds — during the first half of 2022, the Bain report expresses optimism about the upcoming quarter. The market “anticipates a strong holiday season” and limited rough supply, and will likely “return to historic growth pace by 2023-24,” Bain says.

To capture consumer dollars, then, retailers will need to meet demand and market competitively. Commodification is no longer the best way to sell a diamond, says David Kellie, CEO of the Natural Diamond Council (NDC). He encourages retailers to think in terms of “elevating the dream, investing in marketing and communication, investing in store refurbishments, investing in staff development, and connecting with modern culture, rather than commoditizing the diamond purchase and behaving more in a transactional manner.

Still, retailers such as The Clear Cut’s Landau understand that customers see an engagement ring in terms of monetary worth alongside its emotional value. Mined diamonds, she forecasts, will be viewed as an investment. “I’m assuming prices will decrease a bit, especially if there’s less demand in the 1-carat or 2-carat range and below. But I think it will continue to be an investment piece.