Flight to quality gives diamonds a boost

Asian demand keeps diamond prices buoyed for the long term.

Both rough and polished diamond prices are likely to fall by 5% in 2012, reckons Charles Stanley's Kieron Hodgson. But the long-term outlook remains encouraging. Supply looks tight, with no major finds in the last 20 years.

Demand for rough diamonds should steadily increase in the next few years, with the expansion of the middle classes in Asia a key driver. In a decade, the American share of the high-quality diamond market has fallen from 60% to 40%, says Glenn Turner, commercial director at Gem Diamonds.

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