Rapaport Weekly Market Comment

Positive sentiment ahead of Las Vegas shows. Suppliers
maintaining firm polished prices and buyers acclimating to new levels. Strong
US market fuels 2017 global diamond jewelry demand +2% to $82B, according to De
Beers. Momentum continues in 1Q as Macy’s, J.C. Penney note standout jewelry
category. Tiffany & Co. 1Q sales +9% to $1B, profit +53% to $142M.
Richemont FY jewelry sales at Cartier, Van Cleef & Arpels +9% to $5.3B. Rough
trading robust, despite increased bank caution. De Beers raises prices during
$550M May sight. ABN Amro reduces diamond lending and plans to close US and
Dubai branches. Rapaport
to host annual Las Vegas conference on Sunday, June 3, at 8 a.m. Register here.

Fancies: Fancy shapes mixed, with curves better than squares. Ovals hot,
followed by Pears and Cushions. Marquises and Princesses weak. Oversizes
selling well. Steady demand for fine-quality 6-10 ct. Ovals, Pears and
Emeralds, with limited supply. US supporting market for commercial-quality,
medium-priced fancies under 1 ct. Far East demand improving as consumers seek
fancy shapes at better prices. Off-make, poorly cut fancies illiquid and hard
to sell, even at very deep discounts.

United States: New York market stable. Jewelry sales fueling positive mood in
diamond sector. Dealers with set appointments expect positive Las Vegas shows. Steady
demand for 0.50-1 ct., G-J, SI-I1 diamonds. Melee slightly weak.

Belgium: Slow trading during shorter public-holiday week. Activity below
previous months, but better than last year. Dealers focused on
commercial-quality 0.30-1 ct., G-J, VS-SI RapSpec A3+ diamonds. Shortage of
nice SIs above 5 ct. Rough steady and prices firm on secondary market after De
Beers and Alrosa May sales.

Israel: High expectations for Las Vegas shows, as dealers set appointments
and prepare inventory. Suppliers confident as prices remained stable in
seasonally quiet May. Good demand for 0.30-1 ct., D-M, VS1-SI2 RapSpec A3+
diamonds. Fancy shapes improving. Rough dealers focused on 3 grainers and
larger.

India: Quiet trading, with
some dealers still on vacation. Others preparing for Las Vegas. Larger sightholders
expected to use JCK show as branding opportunity. Good demand for SIs in all
sizes. Polished production steady as suppliers anticipate 3Q shortages in
preparation for 2018 holiday season. Rough demand stable.

Hong Kong: Polished orders slow, but dealers expect stronger activity in June.
0.30-0.40 ct. remains hottest category. 0.50-1 ct., D-H, VS-SI also selling
well. Buyers shifting to lower colors and clarities to accommodate tighter
consumer budgets. Jewelry sales steady, with good spending by locals and
tourists.