Gold prices increased by 0.36 percent to close at Rs 134,894, as investors continued to consider the likelihood of further monetary easing by the US Federal Reserve in the coming year. Recent US labour market data indicated a continued cooling trend, as the unemployment rate unexpectedly increased to 4.6 percent in November, while wage growth decelerated to its slowest rate in more than two years. This has solidified anticipations of as many as two rate reductions in 2026, with approximately 59 basis points of easing already factored in.

Market participants are currently directing their attention towards the forthcoming US CPI and PCE inflation data, seeking additional insights for policy direction. Geopolitical risks contributed to the support of bullion prices as new tensions arose following the US decision to impose a blockade on sanctioned Venezuelan oil tankers, which partially countered the optimism surrounding Russia–Ukraine peace discussions.

Morgan Stanley upheld a positive medium-term outlook, forecasting gold prices to reach USD 4,800 per ounce by the fourth quarter of 2026. This projection is underpinned by expected rate cuts, a depreciating dollar, robust Chinese retail demand, and ongoing central bank purchases, even in light of anticipated modest gains. Physical market activity exhibited a mixed performance. In India, discounts expanded to as much as USD 34 per ounce due to lackluster wedding-season demand at historically high price levels, while demand from China remained tepid.

From a technical perspective, the market is experiencing new buying activity, evidenced by a 2.92 percent increase in open interest coupled with a Rs 485 price rise, suggesting the establishment of new long positions. Support is identified at Rs 133,760, with additional potential decline toward Rs 132,630. Resistance is positioned at Rs 135,635, and a sustained breach above this level could propel prices toward Rs 136,380.