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We know they already made swords, as Narsil was originally made by the dwarf, Telchar, during the First Age. Knives are such a basic tool that it's inconceivable for dwarves not to have made them.
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Actually, that same Telchar also made Angrist, Curufin's knife with which Beren later cut one Silmaril from Morgoth's crown - so there's even evidence that Dwarves really did make knives. Unfortunately, there is no description of Angrist in the Silmarillion (though there might be one in one of the many Silmarillion-versions in the History of Middle-earth - can't check right now). The only thing said in the Silmarillion is that Curufin wore it sheathless (like Aragorn wore Andúril at first, too).