Question

why does a freely suspended magnet always settle in the North South direction?

Answer 1

The Poles of the Magnet align themselves with the magnetic field of the Earth. The north pole of the magnet aligns itself with the Earth's South magnetic field. and Vice- versa does the south pole.
There is a large South magnetic polarity in the so called North of the Earth. So when a magnet is freely suspended it's north pole gets attracted by the magnetic south polarity of the Earth (in the north direction) and it points to the North directon.

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Answer 2

Explanation:

It is due to the influence of the earth magnet. The direction of the earth magnet is in the North-south direction of the earth. The North pole of the earth magnet is near the geographical south pole and south pole is near the geographical north pole. Therefore North of suspended magnet align above the south pole of the earth magnet and vice versa.