Diamond prices have continued its decline in July 2025 after slumping close to 2% in June. The precious metal which dominated the retail sector for its unique combination of elements is seeing a slump in sales. Not just in sales, the overall production is also gradually declining as gold takes center stage in the markets this year.

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The DMD/USD index shows that 1-carat cut diamond prices have edged down by 0.3% month on month. While the monthly slump looks smaller since last month, the broader returns in annual terms have fallen nearly 14%. This is the steepest fall in a decade and is making investors wary of taking an entry position.

Also, the 0.3-carat cut diamond prices declined by 1.7% falling by approximately 2.9% annually. This puts the metal under pressure as the global selling activity among investors is outpacing the buying pressure. The commodity markets remain in muddy waters as tariffs and trade wars have caused an imbalance in global trade.

Even the 0.5-carat diamond prices dipped 2.3% in June and 0.5% from the start of 2025. The 3-carat cut diamonds also lost their value by 0.8% in June and 1.2% year-to-date. All the carat pieces are trading in the red this year causing increasing anxiety to commodity traders over their value.

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Why Are Diamond Prices Declining?

There are two reasons for the decline in prices lately and it has to do with tariffs and lab-grown diamonds. The new fad in the retail sector is lab-grown diamonds which are much cheaper than the mined ones. They also shared the same composition, except that they’re grown in a lab.

It is not too expensive and is a sustainable option allowing retailers to own the stone on a modest budget. If the trend grows, the original diamond could soon be in the back seat making prices decline further. The US tariffs have also added to its decline, reported the Rapaport industry agency.