Gold Climbs, Oil Falls, Diamond Forecast Steady

As the global economic slump continues to resound through markets worldwide, it is dragging commodities in its tow, but the diamond industry has remained largely unaffected.

Crude oil dropped to a 16-month low of $64.15 a barrel on the New York Mercantile Exchange on Friday following market speculation that the financial crisis will lead to a great reduction in demand for fuel and in spite of OPEC’s decision to cut production by 1.5 million barrels. Prices have so far dropped 56 percent after peaking at $147.27 a barrel, a record high reached on July 11.

Gold, on the other hand, may be on the rise as more investors appear to flock to the precious metal as a secure investment while equities are weak.

Gold futures for delivery in December rose 2.2 percent to $730.30 an ounce on the New York Mercantile Exchange on Friday. In general, however, the metal declined 7.3 percent last week, and was headed for a 17 percent drop by the end of the month, its worst performance since March 1980.

The diamond industry, in contrast, has been a stalwart of stability in the raging subprime tempest. Being that it is a closed market and production is limited, it has been relatively immune to financial speculation and anxiety spillover.

Still, the luxury product has been affected by downstream pressures resulting from the credit crunch. With especially small retailers of diamonds and diamond jewelry buying fewer goods, diamond traders worldwide have struggled to sell their supplies.

For now, however, diamond prices, though under pressure, remain stable relative to other commodities. IDEX Online’s price index only shows an average decline of 1.6 percent for the price of diamond since September.