Summary of this article
MCX gold futures rose 1.50 per cent to a lifetime high of Rs 1,36,199 per 10 grams.
Internationally, Comex gold futures climbed 1.50 per cent to a fresh all-time high of $4,453 per ounce.
Rally comes amid increased US Fed rate cut bets, ongoing US-Venezuela conflict, and volatility in currency prices
Gold prices scaled fresh record highs on December 22, triggering a sharp rally across India’s derivatives market amid expectations of a further easing in US monetary policy, sustained safe-haven demand and a weaker US dollar.
On the Multi Commodity Exchange (MCX), gold February futures surged 1.50 per cent to a lifetime high of Rs 1,36,199 per 10 grams, as of 4:00 PM. In the international markets, Comex February gold futures jumped 1.50 per cent to a new all-time high of $4,453 per ounce.
Why Is Gold Price Rising Today
US Fed Rate Cut Bets
The rally in the gold prices came as market participants increasingly bet on further US Federal Reserve rate cuts, as early as January. Lower interest rates tend to support non-yielding assets such as gold, as the opportunity cost of holding them declines.
The Chicago Mercantile Exchange’s (CME) Fed Watch Tool suggests a 22.10 per cent probability of a 25 basis point (bps) rate cut by the US Federal Reserve in January next year, while the likelihood of maintaining a status quo is 77.90 per cent.
By March, the expectations of a cumulative 25 bps rate cut increases to 45 per cent. However, markets also see a 45.90 per cent probability of rates remaining unchanged and a 9.1 per cent chance of a cumulative 50 bps cut.
US-Venezuela Conflict
At the same time, investors continue to seek safety in the precious metal amid ongoing geopolitical tensions between the United States and Venezuela, which is reinforcing gold’s appeal as a hedge against volatility.
US President Donald Trump and his top advisors have declined to rule out the possibility of military conflict with Venezuela, as tensions between the two countries continue to escalate over sanctions enforcement and alleged illicit oil shipments.
In the latest development, the US Coast Guard is pursuing an oil tanker in international waters near Venezuela, US officials told Reuters on December 21. If completed, this would mark the second such operation over the weekend and the third interception attempt in less than two weeks.
According to the report, a US official said the vessel is part of Venezuela’s so-called “dark fleet”, a network of ships accused of illegally transporting oil while attempting to bypass international sanctions. “The United States Coast Guard is in active pursuit of a sanctioned ‘dark fleet’ vessel that is part of Venezuela’s illegal sanctions evasion,” the official said, adding that the tanker was flying a false flag and is subject to a judicial seizure order.
Currency Volatility
Currency volatility have also played a role in amplifying gains for domestic gold prices. A softer US dollar bodes well for gold’s prices. When the dollar weakens, gold becomes cheaper for holders of other currencies, which tends to support demand. Further, any depreciation in the rupee against the dollar tends to push local gold prices higher.
“The depreciation is rupee is one of the reasons gold prices are rising as the precious metal is an imported commodity,” said Prathamesh Mallya, deputy vice president, research – mon agri commodities and currencies at Angel One.
Adding on to that, Aksha Kamboj, vice president, India Bullion & Jewellers Association (IBJA), said, “The weaker rupee or higher USD/INR makes gold imports costlier in rupee terms, often pushing up the domestic gold price, while a stronger rupee can take pressure off prices. With gold largely imported, there would be direct impact from currency swings on landed costs. Volatility in the rupee also impacts jewellers hedging strategies and retail pricing sentiment.”
Gold Price Outlook 2026
Looking ahead, market participants will be closely watching a mix of macro and policy signals that could influence near-term price action.
Gold’s near-term movement will be driven more by liquidity conditions, interest-rate expectations and confidence in currencies than by economic growth alone, said Anindya Banerjee, head of currency and commodity research at Kotak Securities.
US Federal Reserve Signals
It will also be crucial to keep a track of signals from the US Federal Reserve, as any indication of a rate pause or eventual cuts will tend to be supportive for gold. Dovish guidance and liquidity support, whether overt or subtle, is likely to add to the positive bias, said Banerjee, adding that gold responds more to policy direction than absolute rate levels.
US Inflation Data
US inflation data is also among the key triggers. Readings such as the consumer price index (CPI)-based inflation and the US Fed’s preferred inflation gauge, personal consumption expenditures (PCE), will also shape expectations around real interest rates. According to Banerjee, sticky inflation alongside a shift towards easing policy pushes real yields into negative territory, conditions that are favourable for gold.
Bond Yields
Bond yields, particularly real yields, will also be crucial to watch, according to Bannerjee. Falling real yields generally support gold prices, while rising real yields can lead to consolidation or mild corrections. “Even when the USD is firm, falling real yields can support gold,” he said.
Currency
Banerjee added that gold’s price will also depend on fluctuations in US dollars, central bank’s de-dollarisation and local factors such as USD/INR trends, foreign portfolio flows and the Reserve Bank of India’s (RBI) currency stance are also critical. “In stress phases, rupee weakness alone can lift MCX gold, even if global gold pauses,” he said.
Jateen Trivedi, vice president, research analyst – commodity and currency, LKP Securities said that if USD/INR retraces towards 88 on positive India-US trade developments and improved foreign institutional investor (FII) inflows, domestic gold may underperform Comex on any global rise or correct if international prices remain sideways.
