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Diamonds to Outwin Gold Prices?

As emerging economies regale in their economic status, prompting citizens to increase their spending on luxury goods, including on diamonds, analysts forecast prices of the precious metal, although not really a new kid on the block, will grow in the next four years, and could possibly out win gold, another precious metal.

Edward Sterck, BMO Capital Markets analyst, said in Bloomberg News that rough or uncut diamonds will rise on the average by 9 per cent to $145 a carat next year, 1.4 per cent in 2013 and 4.8 per cent in 2014.

Compared to gold that is forecast to decline for three years starting 2013, after a 19 per cent gain in 2012, diamond will continue to increase by 2.6 per cent in 2015 and 3.2 per cent in 2016, Bloomberg reported.

As expected, emerging nations like India and China's expanding middle class will drive the demand for diamonds in the upcoming years, analysts said.

The Asian two nations, along with the Middle East, will make up for 40 per cent of global diamond demand by 2015, Anglo American Plc. said earlier.

In the Bain report released earlier, it said global demand for diamonds will expand at an average of 6.4 per cent a year to almost 247 million carats by 2020. Production will likewise soar to an annual 2.8 per cent to 175 million carats, the Bain report added. In 2010, output reached 133 million carats.

Global appetite for diamonds is forecast to surpass supply by 7 million carats in 2016, compared with the 1 million carats shortage this year.

Prices of diamond have not been inflated by artificial demand as with the scenario correlated with gold buying.

Therefore as countries like China and India keep growing and the size of the middle-class population rises, more people will be able to afford diamonds," Rob Henderson, chief economist at National Australia Bank Ltd., said.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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