Gold rate outlook for December and 2025: What can impact prices of yellow metal?

Gold prices have kept everyone on their toes, waiting for the yellow metal to maintain its sheen after hitting a record ₹80,000 per 10 gm for 24K gold during Diwali. Then, the month of November passed, resulting in a 2.6% dip in prices caused by a stronger US economy and the Israel-Hezobollah ceasefire.

Just as one thought of abandoning dreams of seeing gold approach ₹1 lakh mark, the drop in prices after the festive season was reversed. The uncertainty of global markets and the ever-so-tangled geopolitical situation, led by the Russia-Ukraine conflict, resulted in an upward trend for the precious metal’s prices once again.

With the new year just around the corner, gold continues to captivate investors. What are the factors that can impact Multi Commodity Exchange of India (MCX) gold prices in December and 2025?

Geopolitical uncertainty, global instability and market volatility

Gold prices in India are affected by global instability and geopolitical conflicts as much as by domestic factors. Investors worldwide tend to bank on global factors, keeping a check on the prices when the situation is uncertain.

When major economies slow down, demand for gold as a safe haven rises. Gold is considered a safe investment, making its prices increase dramatically when tensions mount and people lose trust in currencies.

Geopolitical tensions, such as the Israel-Palestine conflict, the Russia-Ukraine war and the unrest in the Middle East, push gold prices higher. When the tensions start to ease, prices tend to move in the opposite direction.

Market volatility also impacts gold prices. Investors often react to uncertainty and fluctuations in financial markets quickly, finding security in safer investments like gold, benefitting from the risk premium associated with it. Risk premium is the value expected to be added to the medal due to global uncertainty and market volatility.

Inflation

A rise in inflation becomes a negative driver for the economy, forcing investors to look for safer investments like gold. Central banks often increase interest rates to control inflation, as increased interest leads to lower spending and a slowing economy, making gold unappealing for investors. However, when they push for more consumer spending and keep the interest rates steady, inflation can rise, driving up prices for the yellow metal.

Gold reserves

All central banks have gold reserves. When the reserves increase, the prices go up. This happens as these national banks can sway public perception and market sentiment—when they increase their reserves, it is perceived that they are going for the safe haven with currency depreciation in mind, making gold more appealing, and vice versa.

US dollar

A stronger US dollar usually results in lower gold prices. When the US currency is strengthened, gold imports can become costlier, lowering its demand as well as its prices. The US Fed meeting scheduled in December can highly impact the metal’s prices. Any cuts in interest rates may drive prices upward. However, recent US economic data indicates steady inflation and economic growth, which could counteract this trend.

Can technology impact gold prices?

According to a World Gold Council (WGC) report, rising demand for advanced artificial intelligence (AI) technology could boost gold prices. AI-enabled devices rely on hardware that often incorporates gold due to its exceptional conductivity, corrosion resistance, and ability to form reliable, thin wires.

The demand for AI and modern technology is only bound to increase in the near future. Most AI-enabled devices thrive on efficient electronic components and the yellow metal’s exceptional conductivity makes it a reliable option for producing data processors that are both sustainable and cost-effective.

Moreover, the WGC report showed that gold’s resistance properties that help delay corrosion and other physical and chemical characteristics help to transform gold into exceptionally thin and reliable wires, making it indispensable.

In a nutshell

Gold prices are impacted by many intertwined factors–from currency fluctuations to technological advancements and from geopolitical tensions to inflation rates. Investors are always advised to keep a check on all important factors while tracking gold and pay attention to what could take them by surprise. As 2025 gets nearer, the month of December can be a big one for gold. With US Fed and RBI MPC meetings scheduled in the month, wedding season causing an uproar in the domestic markets, and rising inflation rates taking a toll on the economy, gold prices can fluctuate highly depending on how things pan out.