Diamonds Have It Rough

Natural diamonds are falling out of favor with American shoppers as lab-grown alternatives grow ever-cheaper. Jewelry stores don’t mind—yet.

Natural diamonds are losing their sparkle. What will it take to restore it? After a postpandemic surge in demand in 2021 and 2022, naturaldiamond prices are down about 8% compared with the first quarter of 2020, while lab-grown diamond prices are down 75%, according to data from diamond-industry analyst Paul Zimnisky, Lab-grown diamond prices are declining because the cost of manufacturing them keeps coming down, but weak demand is largely to blame for declining natural-diamond prices. Consumers in the U.S., the largest diamond market, are happily opting for bigger and cheaper lab-grown diamond options over mined ones. Natural-diamond jewelry sales in the U.S. declined 0.7% through November compared with a year earlier, while lab-grown diamond-jewelry sales rose 12.5%, according to industry analyst Edahn Golan.

In a 2024 survey of U.S. consumers by the Knot, an online wedding-planning platform, more than half of respondents said their engagement rings featured a labgrown diamond as a center stone, up from 46% in 2023 and 12% in 2019. Lab-grown diamonds have nearly the same chemical, optical and physical properties as natural ones, which means the naked eye can't detect any differences, according to the Gemological Institute of America.

Demand has also been sluggish in China, typically the second-largest market for the stone. Diamondjewelry demand in the country is down by roughly a quarter in 2024 compared with 2023, which was already a weak year. This broadly tracks declines in Chinese spending on other luxury goods.