What Factors Affect Current Diamond Prices?

A system developed by the Gemological Institute of America in the 1950s that grades diamonds by color, clarity, cut and carat weight determines a diamond's price. The value is affected by the quality and rarity of the four categories.

The less color in a diamond, the more its per-carat price rises. Colorless diamonds are very rare, while diamonds with light yellow or brown coloring are in the normal color range. Each diamond is given an alphabetical rating based on its color and fluorescence when exposed to ultraviolet light. The letter A represents completely colorless diamonds, and Z represents diamonds that are mostly yellow or brown.

A clarity grade is determined by how many blemishes or inclusions as diamond contains. These include scratches or nicks on the surface of the diamond or minerals trapped inside the stone. These characteristics also help gemologists determine if a diamond is real or an imitation, as real diamonds typically contain flaws. There are 11 gradations of clarity, beginning with the extremely rare flawless grade.

A diamond's cut determines how precisely the light reflects through the facets of the diamond. A well-cut diamond has brightness from white light reflection, flashes of color called fire and scintillation or light and dark areas. The carat weight of the diamond is the final factor that determines price. One metric carat is the same as 0.2 grams, and each diamond is accurately weighed to within 0.001 carats. The larger the carat weight, the more the diamond will cost.