Investment diamond prices fell a further 0.8 per cent in May and are down around three per cent since the beginning of the year, as market turbulence rocks demand from major diamond-consuming markets, said a new report.

This decline in investment diamond prices is in aligned with other financial and commodity markets, according to Fusion Alternatives, the investment diamond specialist advisor.

The news follows the shelving of the Graff Diamond $1 billion initial public offering in Hong Kong, which industry critics say does not bode well for the diamond market, pointing to a lack of investor support.

However Fusion Alternatives hopes this is not the case.

"We believe that the decision to withdraw the IPO was more related to timing issues in current volatile equity markets than an indication of lack of investor support for diamonds," said partner Saul Singer.

"It is also important to note that an investment into Graff Diamonds would only give investor exposure to Graff Diamonds as a stand-alone company and could potentially be used as a proxy for diamond prices in the very niche ultra-high-end sub-sector of the market and which does not reflect overall diamond price movements."

He added that he expects investment diamond prices to stabilize over the next few months.

Initial reports from the world’s largest diamond and jewellery trade show held in Las Vegas last week point to a stable yet cautious trading environment.

All eyes will turn to Hong Kong later this month for the next major international diamond and jewellery trade show which should provide further insight into Asian market sentiment - which has underpinned global diamond demand growth over the last 12-18 months.