By David Brough
A slump in the pound against the safe-haven US dollar is driving up imported precious jewellery material costs in sterling terms in the UK market, most noticeably diamonds and some coloured gemstones, and costs could rise further for UK jewellers and manufacturers if inflation keeps driving higher.
The pound fell further against the dollar this week, recording its steepest weekly loss since September 2020, driven by fears over rising prices and recession in the UK.
The UK is mainly an importer of precious jewellery materials which tend to be priced in US dollars.
While gold and silver prices have seen recent softness in dollar terms linked to rising US interest rates, the prices of natural diamonds and some coloured gemstones have risen sharply in dollars.
Tony Brooke, Chairman of digital marketplace Gembridge, spoke of soaring prices of Sri Lankan sapphires due to the economic crisis in Sri Lanka.
Demand for natural diamond jewellery in the UK appears to be impacted by the cost of living crisis, with inflation at a 40-year-high, opening up market opportunities for lab-grown diamonds.
Dinesh Parekh of Birmingham-based supplier Just Diamonds said he had recently ordered dozens of lab-grown diamond jewellery items for inventory and sold them promptly, reflecting the strong demand in the UK market for lab-grown diamond (LGD) jewellery. Suppliers of LGD jewellery were out in force at the Company of Master Jewellers (CMJ) Trade Event in Newport, Wales, this month.
Andre Michael lab-grown diamond jewellery
Silver jewellery sales may also be benefiting currently from squeezed incomes of middle-income consumers, worried about food and energy bills, who cannot afford costlier precious jewellery.
If the pound continues to fall and monetary authorities fail to win the war on inflation soon, prices of imported precious jewellery materials denominated in dollars appear set to rise further, possibly leading to a re-positioning of market segments across the UK jewellery sector.
(Disclaimer: any opinions expressed in this article are solely those of the author, and should not be seen as investment advice.)
