In general, the labor theory of value states that the more labor it takes to make something, the more its exchange-value goes up.

There's not much use value from a diamond, but they're hard to get. If you could just pick them up off the ground like pebbles, even if they were about as rare, they'd be largely worthless.

Also, some post modernists intending to refute Marx talked about notions of social capital, which exactly are a good expansion of the original theory. A diamond doesn't have good use-value, but it has social use-value. It demonstrates class and status, among other things. Wearing one is a kind of decadent display, as if to say you have so much money, you can wear someone else's wages on your body like a trifle.