Jewelry Market Transformation: The Rise of Lab-Grown Diamonds and Financial Gold

Jewelry markets are evolving with the adoption of lab-grown diamonds and a shift towards financial gold products. This trend, driven by affordability and changing consumer preferences, poses both challenges and opportunities for the industry, with significant implications for traditional diamond and gold markets.

The jewelry industry is witnessing a transformative phase as women begin to blend natural diamonds with lab-grown diamonds (LGD) in their collections. This trend, noted by Kotak Institutional Equities, signals a gradual shift driven by factors including education, rising disposable income, and changing fashion tastes.

With LGDs priced significantly lower than natural diamonds, the industry is on the brink of change. This affordability is reshaping consumer purchasing behaviors, offering more choices and altering the traditional diamond market dynamics. Meanwhile, gold's role as a value store remains robust, yet an evolution in investment forms, such as gold ETFs, is noticeable.

The emergence of LGDs as a cost-effective alternative and the shift towards financial gold products could impact jewelry companies in multiple ways. Revenue growth might slow if households choose gold ETFs over physical jewelry, profitability could decline as LGDs capture market share, and stock valuations may not fully reflect these potential shifts.

(With inputs from agencies.)