Rough prices are up, polished prices are down, but still shortages abound

Market activity slowed noticeably in late April and early May. Consumers are still cautious. Demand for gold as a hedge against paper currency sent prices to record closes in May. Gold speculation is expected to drive prices higher, at least in the near term. The impact on jewelry manufacturers is apparent. Given the current soft appetite for spending, leading manufacturers continue to use combinations of metals as well as nontraditional materials in their product lines. Meanwhile, in the diamond market, signals remain mixed. Dealers report that rough prices have returned to their prerecession level but that polished prices lag significantly behind. As a result, even though the market climate is soft, the market is experiencing shortages as dealers shy away from buying goods at prices that allow them no profit.