Tremendous fall in the price of gold on January 12! From seventh heaven straight to earth – StudyToper

Recently, there has been a big ups and downs in the gold market. The sudden fall in gold prices has shocked investors and the general public. This fall was so fast that people are describing it as falling “straight from the seventh sky to the ground”. In this article we will discuss in detail the causes, effects and future prospects of this decline.

Gold has always been considered a safe investment. But when there is such a huge fall in its prices, it raises many questions. Is this decline temporary or will it last for a long time? What effect will this have on the economy? What should small investors do? We will try to answer all these questions in this article.

Overview of fall in gold prices

Due to fall in gold price

There are several reasons behind this sharp fall in gold prices:

1. Strengthening US Dollar: When the dollar strengthens, gold prices fall. Recently, signs of improvement in the US economy have strengthened the dollar.
2. Increase in interest rates: Increase in interest rates by central banks has reduced the demand for non-yielding assets like gold.
3. Improvement in the global economy: The global economy is gradually improving after the Covid-19 pandemic, due to which the demand for gold as a safe investment has reduced.
4. China’s economic slowdown: The slowdown in the economy of China, which is a big consumer of gold, has also affected the demand for gold.
5. Technical factors: Chart patterns and technical analysis have also fueled the price decline.

Effect of fall in gold price

Impact on jewelery industry

The biggest impact of the fall in gold prices has been on the jewelery industry:

• Increase in sales: Lower prices attract customers, leading to increased sales.
• Margin pressure: However, jewelers may incur losses on old stock.
• New Designs: Low prices have inspired jewelers to bring out new and innovative designs.

impact on investors

This has been a challenging time for investors:

• Small investors: Many small investors, who had bought gold at higher prices, are facing losses.
• Big Investors: Some big investors are considering this as a good opportunity to buy.
• Gold ETFs: Those investing in Gold ETFs have also suffered losses.

impact on economy

The fall in gold prices has also had an impact on the country’s economy:

• Import Bill: India, which is a major importer of gold, has seen its import bill reduced.
• Inflation: Low gold prices have helped control inflation.
• Foreign Exchange Reserves: The fall in the price of gold has also affected the country’s foreign exchange reserves.

Measures to deal with the fall in gold prices

government initiative

The government has taken several steps to deal with the situation:

1. Gold Monetization Scheme: This scheme has been made more attractive so that people deposit their gold in banks.
2. Changes in import duty: The government has made changes in the import duty of gold to stabilize the prices.
3. Hallmarking: Hallmarking has been made more stringent to ensure the quality of gold.

Tips for investors

Investors need to proceed with caution at this time:

• Long term view: Take a long term view while investing in gold.
• Portfolio Diversification: Diversify your investment portfolio, don’t just depend on gold.
• SIP in Gold ETFs: Consider investing in Gold ETFs through SIP.
• Avoid market timing: Don’t try to take advantage of price fluctuations.

future prospects of gold

short term scenario

Gold prices may continue to fluctuate in the next few months:

• Federal Reserve Policies: The policies of the US central bank will affect gold prices.
• Global Stress: Any type of global stress can increase the demand for gold.
• Festive Season: Demand is expected to increase in the coming festive season.

long term perspective

In the long term, experts believe gold prices could rise again:

• Inflation hedge: Gold will continue to be a major inflation hedge.
• Purchasing by central banks: Central banks of many countries are increasing their gold reserves.
• Technical Uses: Increasing use of gold in electronics may increase demand.

Fall in Gold Price: What to do and what not to do

What to do

1. Do your research: Research thoroughly before investing.
2. Take expert advice: Consult financial advisors.
3. Gradual investment: Instead of investing a large amount at once, invest gradually.
4. Focus on quality: Buy only certified and Hallmarked gold.

what not to do

1. Panic Selling: Don’t panic and sell your gold.
2. Excessive Borrowing: Do not borrow excessively to buy gold.
3. Betting: Avoid betting on gold prices.
4. Belief in rumours: Do not believe in market rumours.

Gold Alternative Investment Options

Apart from investing in gold, investors can also consider the following options:

1. Silver: Cheaper than gold and has more industrial uses.
2. Platinum: Rare and high value metal.
3. Mutual Funds: Professionally managed with diversified portfolio.
4. Real Estate: An option for long term investment.
5. Stocks: High risk, but potentially high returns.

conclusion

This fall in gold prices is a matter of concern, but it also provides opportunity. This is the time for investors to reevaluate their portfolio and revisit their investment strategy. Gold has been a store of value for a long time and will continue to be in the future. However, it is important that investors take careful and informed decisions.

Disclaimer

This article is for informational purposes only and should not be taken as financial advice. Gold price fluctuations depend on complex factors and it is impossible to predict future prices accurately. Always consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for the consequences of any investment decisions made based on the information contained in this article. Investing in gold can be risky and may not be suitable as per your personal financial situation.