Diamonds to outpace gold as spending in Asia rises

Diamond prices are poised to rise for the next four years, outpacing gold, as increased spending on luxury goods in China, India and the West Asia outpaces supplies of the precious stone, analysts said.

"The average price of rough, or uncut, diamonds will probably rise 9%to $145 a carat next year, 1.4% in 2013 and 4.8% in 2014," BMO Capital Markets analyst Edward Sterck said.

The gem should gain 2.6% in 2015 and 3.2% in 2016, he said. Gold is forecast to decline for three years starting 2013, following a 19% gain in 2012, according to the median of seven analyst forecasts compiled by Bloomberg News. Demand for diamonds may grow at double the pace of supply through 2020 because of an expanding middle class in China and India, Bain said this month in a report that didn't give price forecasts.

The two nations, and the West Asia, will account for 40% of global diamond demand by 2015, compared with about 8% in 2005, said Anglo American, which agreed to boost its stake in De Beers, the world's largest diamond miner, to 85% last month.

"We expect emerging nations, first and foremost India and China, to drive the demand for diamonds in the upcoming years, while consumption of developed nations is likely to moderate somewhat," said Vladimir Sergievskiy, an analyst at Moscow- based Finam Investment. "On the supply side, the commissioning of new mines should be largely offset by depletion of matured ones."

Global demand for diamonds will probably outstrip supply by 7 million carats in 2016, compared with a shortage of 1 million carats this year, Sergievskiy said. "Prices are expected to climb 9.7% next year, 2.7% in 2013, 3.3% in 2014, 3.2% in 2015, and 3.1% in 2016," he said.

"The price of rough diamonds may fall an average 5.1% in 2012 and remain little changed in 2013," said Richard Platt, managing director of UK-based WWW Diamond Forecasts.

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