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Diamonds come in a variety of colours, some of them highly prized (pinks, blues, even yellow). However in a white diamond, the presence of a yellow tint will lower the price of a diamond. The less body colour in a white diamond, the more true colour it will reflect, and thus the greater its value.
Diamonds of D, K, and Z
Diamonds are graded on a scale of D (colourless) through Z (light colour). All D-Z diamonds are considered white, even though they contain varying degrees of colour. True fancy coloured diamonds (such as yellows, pinks, and blues) are graded on a separate colour scale.
Grade Colour Scale
While there are differences in colour between D, E, and F diamonds, they can be detected only by a gemologist in side by side comparisons, and rarely by the untrained eye.
D-F diamonds should only be set in white gold / platinum. Yellow gold reflects colour, negating the diamond's colourless effect.
The photo below shows a master set used by gemologists to grade colour in diamonds. Each diamond to be graded is compared to the master set to determine where it should fall on the diamond colour scale. The colours you see below are slightly exaggerated, since viewing diamonds face down makes their body colour more pronounced. The face down orientation makes the detection of body colour easier because brightness and fire are minimized when the diamond is face down.
This J colour diamond appears whiter when set in yellow gold
Colour becomes much harder to detect once a stone is set in a ring and placed in an environment that contains colour (as opposed to the all white background used in diamond colour grading). For instance, an H colour diamond may look as colourless as a D when set in a ring under normal lighting conditions, especially if the two are not compared side by side.
Another factor that affects a diamond's apparent colour is the colour of the mounting itself. Yellow gold makes slight amounts of yellow in a diamond less obvious, while white metal mountings make the colour in yellow diamonds more apparent.
The vast majority of untrained observers (and many gemologists) cannot distinguish a colour grade from the one just above or below unless the diamonds are compared side by side in a controlled environment.
Colour becomes more important as carat weight increases, because colour is easier to perceive in a larger diamond, just as a carafe of white wine shows more colour than a single glass.