The global diamond market is undergoing one of its sharpest and most consequential repricings in years, as a flood of mined supply and the explosive growth of lab-grown alternatives drive natural stone prices to record lows.
Data from diamond trading platform Rapaport Group shows that a 1-carat natural diamond now sells for an average of $3,898, down 51% from the 2021 average of $8,007. The pressure is also visible in the Diamond Standard Index, which tracks so-called investment-grade diamonds. That benchmark fell to 2,490 in early August, its lowest level on record, and this week was hovering only slightly above 2,500.
The decline marks more than a cyclical soft patch. It reflects a structural shift in how diamonds are produced, marketed and valued, with the traditional scarcity narrative around mined stones increasingly challenged by both excess inventory and changing consumer behavior.
"There's a lot of doom and gloom about natural diamonds," Diamond Standard CEO Cormac Kinney told CNBC. He said the market was weighed down by "a very large overhang of excess inventory back in 2023 and 2024 after excess production during Covid," combined with "falling sales due to the lab-grown" category.
That combination has proved especially damaging. During and after the pandemic, producers generated more supply than the market could comfortably absorb. Those stones then moved into a retail environment where consumers, squeezed by broader cost-of-living pressures and offered a dramatically cheaper substitute, became less willing to pay traditional premiums for mined gems.
Lab-grown diamonds have emerged as the clearest disruptive force. Chemically and physically, they are the same as natural diamonds, produced either by applying heat and pressure to carbon seeds or by using carbon-containing gas in a vacuum chamber. To most buyers, they look and feel identical to stones formed naturally deep within the Earth. But their price point is radically different.
A CNBC search of Brilliant Earth's online marketplace found that a nearly colorless lab-grown diamond with very, very slightly included clarity and an excellent cut could sell for about $450. A natural diamond with comparable specifications was listed in the range of $2,800 to $3,200. According to Brilliant Earth, lab-grown stones are cheaper than natural diamonds at every carat weight, and in some cases can cost as much as 90% less than mined equivalents, depending on size, cut and color.
That price gap is changing purchasing decisions, particularly in bridal jewelry, where symbolism remains strong but budget sensitivity has intensified. Engagement rings with lab-grown center stones accounted for 61% of all engagement ring sales in 2025, according to The Knot 2026 Real Weddings Study. That represents a 239% increase since 2020, underscoring how quickly consumer preferences have shifted.
For many buyers, the appeal is straightforward: larger stones, lower prices, and more financial flexibility elsewhere. Cory Schifter, owner of New York and New Jersey-based Casale Jewelers, said lab-grown diamonds are "opening up opportunity for people to spend what they want and get what they want, as opposed to having to create halos around their center stone because they have a 1-carat and want make it look like a 3[-carat]." He added that customers can use the savings for other priorities, "maybe buy a house or whatever they want to do."
Schifter also offered a blunt assessment of diamonds as an asset class. "You shouldn't be buying a diamond thinking that there's a financial investment [aspect] to it," he said, a view that cuts against decades of marketing that helped position natural diamonds as enduring stores of value as well as symbols of romance.
The numbers suggest the challenge for the natural diamond sector is not simply one of weak demand, but of eroding pricing power. If consumers can obtain a visually identical product for a fraction of the cost, the premium attached to mined stones increasingly depends on intangible factors such as rarity, origin, tradition and emotional resonance. Those attributes still matter to many buyers, but they are proving less effective at defending prices in a market where affordability has become a dominant consideration.
The lab-grown segment, meanwhile, is expected to keep expanding. Fortune Business Insights projects the market will grow to nearly $92 billion by 2034, more than tripling from its estimated value of $29.46 billion in 2025. That trajectory points to a long-term competitive threat rather than a passing retail trend.
The natural diamond industry has begun responding. Producers and traders are trying to work through excess inventory and support prices after the supply buildup of 2023 and 2024. The source material indicates that De Beers Group, part of Anglo American, has taken notice and is beginning to implement measures aimed at lifting weak stone prices, a sign that major industry players recognize the severity of the downturn.
Still, the market faces a difficult balancing act. Cutting supply may help stabilize prices, but it cannot by itself reverse the consumer migration toward cheaper alternatives. Nor can it easily restore the perception that natural diamonds are insulated from broader market forces. What is unfolding instead is a repricing of the category itself, as buyers draw a sharper distinction between emotional value and resale value.
For miners, traders and luxury retailers, that shift could redefine the industry for years. Natural diamonds are unlikely to disappear from the jewelry market, particularly at the high end where provenance and rarity still command a premium. But the era when the broader market could rely on scarcity alone to sustain elevated prices appears to be under growing strain.
What remains is a more fragmented diamond economy: one in which natural stones compete not only with each other in an oversupplied market, but with a technologically produced rival that has rapidly won over mainstream consumers. The result is a sector confronting a hard new reality — that in a market increasingly driven by price transparency and practical spending, diamonds may still sparkle, but they no longer command unquestioned value.