Gold and other precious metals posted gains on Thursday after U.S. job market data showed continued softening, reinforcing expectations for Federal Reserve rate cuts despite a firmer dollar and higher Treasury yields capping advances.

Current Gold Price Performance

Spot gold added 0.1% to $4,456.98 per ounce, recovering from Wednesday's profit-taking decline. U.S. gold futures for February delivery also firmed 0.1% to $4,465.70. The precious metal remains near record territory after hitting an all-time high of $4,549.71 on December 26.

Gold ended 2025 with a remarkable 64.4% gain, marking the biggest yearly increase since 1979.

Labor Market Data Supports Fed Easing Case

U.S. job openings dropped to a 14-month low in November according to JOLTS data, while hiring resumed its sluggish pace, pointing to ebbing demand for labor amid policy uncertainty related to import tariffs. The softer employment data reinforced market expectations for monetary policy easing.

"The data from the labor market continues to support the case for Fed rate cuts, which has been underpinning gold prices," market analysts noted. However, gains were tempered by the dollar holding steady near a more than two-week high and the benchmark 10-year U.S. Treasury yield rising from Wednesday's one-week low.

Federal Reserve Rate Cut Expectations

Investors currently expect at least two Fed rate cuts this year, with market focus turning to Friday's non-farm payrolls data for additional labor market insights. Non-yielding assets like gold tend to perform well in low-interest-rate environments and during periods of geopolitical or economic uncertainty.

Geopolitical Developments

Geopolitical tensions continued to provide support for safe-haven assets. The U.S. seized two Venezuela-linked oil tankers in the Atlantic Ocean on Wednesday, one sailing under Russia's flag, as part of President Donald Trump's aggressive push to control oil flows in the Americas.

Other Precious Metals Performance

Other precious metals also posted gains during the trading session, reversing Wednesday's sharp declines.

Spot silver lost 0.7% to $78.70 per ounce after hitting an all-time high of $83.62 on December 29. HSBC forecasts silver will trade between $58 and $88 an ounce in 2026, driven by tight physical supply and robust investment demand, but warned of a potential market correction as supply constraints ease. Spot platinum rose 0.2% after scaling a record peak of $2,478.50 last Monday.

India's household gold reserves have achieved a remarkable milestone, crossing the $5 trillion mark as international gold prices soar to unprecedented levels above $4,500 per ounce. This extraordinary wealth accumulation now surpasses the country's entire gross domestic product of $4.10 trillion, highlighting the precious metal's enduring significance in Indian society.

Record Valuations Drive Milestone Achievement

The milestone stems from spot gold touching fresh peaks above $4,500.00 per ounce in international markets. According to Morgan Stanley estimates, Indian households own approximately 34,600 tonnes of gold. At recent record pricing, this translates to over $5.00 trillion in household gold wealth - a figure that dwarfs the nation's economic output.

For Indian families, gold represents far more than investment - it embodies memory, security, and tradition. From grandmother's bangles locked away for decades to wedding jewelry that doubles as family insurance, gold serves as both cultural artifact and financial safety net.

The Wealth Effect Debate

Morgan Stanley suggests that rising gold prices create a positive wealth effect, strengthening household balance sheets alongside lower interest rates and tax benefits. However, Emkay Global challenges this thesis through behavioral analysis. Research indicates that past gold rallies have not translated into higher consumption patterns.

The reason lies in how households perceive their gold holdings. Nearly 75-80% of household gold exists as jewelry rather than marked-to-market investments. Unlike financial assets, families rarely value their gold holdings daily, potentially preventing wealth effects from materializing during price surges.

India's Dominant Market Position

India maintains its position as the world's second-largest gold consumer, accounting for approximately 26% of global demand, trailing only China at 28% according to the World Gold Council. The composition of demand shows evolving patterns, with investment components gaining prominence.

Bars and coins as retail investment instruments have surged from approximately 24% to 32% of total demand, indicating gold's growing recognition as a financial hedge beyond traditional adornment purposes.

Central Bank Accumulation Strategy

The Reserve Bank of India has actively participated in gold accumulation, adding roughly 75 tonnes to reserves. Total RBI gold holdings now reach approximately 880 tonnes, constituting nearly 14% of India's foreign exchange reserves according to Morgan Stanley data.

Globally, central banks have driven significant demand, particularly the People's Bank of China, reflecting strategic diversification away from dollar dependence and efforts to strengthen monetary sovereignty amid geopolitical uncertainties.

Economic Paradox and Policy Challenges

Gold presents a fundamental economic paradox for policymakers. While culturally significant and financially substantial, it remains largely idle from a productivity standpoint. The precious metal generates no income, enhances no productivity, and contributes minimally to direct capital formation.

Despite policy initiatives promoting financial alternatives like gold ETFs, sovereign gold bonds, and digital gold platforms, success remains limited. The deep-rooted preference for physical gold, driven by tradition, tangibility, and trust, proves difficult to redirect toward more productive economic channels.

Large-scale gold imports affect India's current account deficit and influence exchange rate dynamics. Simultaneously, gold functions as an informal financial system, providing liquidity through gold loans when formal credit access proves limited.

Future Implications

As gold prices continue their upward trajectory, India's $5.00 trillion household gold reserves represent both economic opportunity and policy challenge. The task ahead involves unlocking this substantial value to drive economic growth and structural transformation while respecting gold's profound cultural significance in Indian society.

The phenomenon underscores gold's unique position in India - simultaneously representing the world's largest concentration of household precious metal wealth and a testament to cultural values that transcend pure economic considerations.