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If you have been planning to invest in gold for a long time or buy jewelery for your home, then this could be a great opportunity for you! There has been a sharp decline in gold prices in the international market in recent times. This is considered to be the biggest weekly fall of gold in the last six weeks. This softening of prices has not only surprised the investors, but has also attracted the common people who were postponing the purchase of gold towards the market again.

Middle East crisis and the dilemma of safe investment

According to experts, there are many major global reasons behind this decline. On one hand, the ongoing conflict and geopolitical tension in the Middle East is attracting investors towards gold, because gold is always considered a ‘safe haven’ i.e. a safe investment. But on the other hand, the rise in crude oil prices due to the war has also increased the fear of inflation. Due to this dual situation, there is a lot of fluctuation in the prices of gold.

Impact of US Federal Reserve policies

The biggest factor putting pressure on gold prices is American interest rates. Earlier the market expected that the US Federal Reserve would cut interest rates, but now there are indications from the Fed to keep interest rates ‘high for a long time’ to keep inflation under control. Since gold is not an interest bearing asset, the attraction towards gold reduces slightly in times of high interest rates. Apart from this, the strength of the US dollar has also dulled the shine of gold.

There is excitement in the bullion market, preparations for marriages.

The direct effect of this fall in prices is clearly visible in the bullion market. Customers who were postponing their purchases due to rising prices are now turning to jewelery shops again. Traders believe that in view of the upcoming festive season and weddings, the demand for gold may increase further. At present investors are giving more importance to gold than silver.

What will be the future trend of gold?

In which direction gold will move in the coming days, it will completely depend on the global conditions. If tensions in the Middle East worsen, demand for gold as a safe-haven investment could increase and prices could rise again. At the same time, if the US Federal Reserve remains strict on its stance and the dollar becomes stronger, then the pressure on gold may remain. Market experts advise that instead of taking hasty decisions, investors should keep an eye on international developments, latest inflation data and policies of central banks. From a long-term perspective, gold still remains a reliable investment.