Gold prices experienced a significant increase, closing up by 6.82% at Rs 153,809, as investors adjusted their positions in response to elevated uncertainty and the absence of crucial U.S. economic data resulting from a partial government shutdown. The lack of the January U.S. employment report has diminished immediate clarity regarding Federal Reserve policy, prompting safe-haven buying even as the dollar remains relatively stable. Global investment interest was notably robust, as evidenced by a 2.24% month-on-month increase in gold holdings within London vaults, alongside Switzerland experiencing a 27% surge in gold exports in December, largely propelled by significant flows to the UK.
Demand from the official sector continues to serve as a significant foundation of support. In 2025, Poland distinguished itself as the predominant buyer among central banks, whereas China’s central bank continued its gold acquisition for the 14th consecutive month, highlighting an ongoing trend of diversification away from the dollar. In light of this strong demand forecast, leading financial institutions have adopted a more optimistic stance.
UBS has adjusted its gold price forecast to $6,200 per ounce for the majority of 2026, whereas Deutsche Bank anticipates a potential for $6,000 should the dollar remain weak. Physical market premiums in India and China have experienced a significant increase, indicating robust investment and jewellery demand even in the face of unprecedented global prices.
From a technical perspective, the market is experiencing short covering, as evidenced by a 1.29% decline in open interest alongside a price increase to Rs 9,818. Gold exhibits a support level at Rs 148,750, with an additional support threshold at Rs 143,690. Resistance is identified at Rs 157,335, and a sustained movement above this level could drive prices towards Rs 160,860.