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Gold prices declined

The fire that was burning in gold prices as soon as the festive season ends, now seems to be cooling down. The gold which was touching the sky till a few days ago and making new records, has suddenly started becoming cheaper. The price of gold has fallen from record high to Rs 1.21 lakh per 10 grams, whereas some time ago it had reached the level of Rs 1.32 lakh. This huge fall has created a stir in the market. Those who bought at high prices are a little worried, while those who were waiting to buy for the wedding season are feeling hopeful.

The biggest question floating in the market right now is whether this decline will continue? What gold Can the price once again fall below the psychological level of Rs 1 lakh per 10 grams? It is important to understand whether this decline is just a small 'correction' or the beginning of a long recession.

Why did gold become 'cheaper' after festivals?

Not just one, but many big reasons are working together behind this sharp fall in gold prices. When gold touched its all-time high earlier this month, investors saw a big opportunity to make profits.

The first and biggest reason is 'Profit Booking'. Investors who had bought gold at low prices started selling on a large scale as soon as they saw the prices at record levels. When selling pressure suddenly increases in the market, prices naturally come down.

The second big reason is the strength of the dollar. The US dollar is continuously strengthening in the international market. An inverse relationship is often seen between gold and dollar. When the dollar strengthens, gold bought in dollars becomes expensive for other countries of the world, due to which its demand decreases. Investors also like to move their money out of 'safe haven' like gold and invest it in the strengthening dollar.

The third reason is lack of demand. According to India Bullion and Jewelers Association (IBJA), the tremendous shopping atmosphere which was there during festivals (like Dhanteras and Diwali) has now become normal. The end of festive demand has also put pressure on prices.

big game of international market

This decline is not limited to Indian markets only, its real impact is visible in the international markets. Just a few days ago, the price of 'spot gold' in the international market had reached a historic peak of $ 4,381.21 per ounce. But from there it fell drastically by more than 6% and slipped below $4,100 an ounce.

Experts say that this is one of the biggest one-day falls in gold since 2013. When there is such a huge upheaval in the international market, it directly impacts the gold prices in India. The journey from Rs 1.32 lakh to Rs 1.21 lakh in India is the result of this global decline. According to Darshan Desai, CEO of Aspect Bullion and Refinery, this fall has put a brake on the nine-week long continuous rise in gold price.

Is this a dip or a buying opportunity?

Now coming to the most important question, what will happen next? Will the price of gold go below Rs 1 lakh? Most experts believe that this decline is a 'technical correction'. When something grows very fast and very much, it is natural for it to decline a little. This is a way to stabilize the market.

According to experts, the attention of investors is now shifting from gold to other places also. The positive news of trade agreement between US-India and talks between US-China has increased the 'risk' taking mood of the market. This means that instead of safe investments like gold, investors are now looking towards 'risky' investments like the stock market, due to which the pressure on gold has increased.

However, this decline is unlikely to last for long. IBJA Vice President Aksha Kamboj says that even though buying may be slow in the short-term, long-term investors are still considering gold as the safest bet.

Wedding season can increase its shine again

Amidst this fall in prices, there is a big factor which can push the price of gold upwards again, and that is the wedding season in India. After the festivals, the wedding season is about to begin, in which gold and jewelery are purchased on a large scale in India.

As soon as this demand for marriage comes in the market, prices can get a strong support. Therefore, experts believe that this decline could be an opportunity for buyers, as there is every possibility of prices rising again due to wedding season demand. In such a situation, the speculation that the price of gold will go below Rs 1 lakh seems far-fetched at the moment. This decline may be a temporary pause, not the beginning of a long recession.