Indian government bond yields ended higher on Thursday as traders eyed fresh supply though weekly debt auction along with minutes of the Indian central bank's latest meeting, both due on Friday.

The 10-year benchmark bond yield ended at 7.1897%, after closing at 7.1679% in the previous session.

"There is hardly any interest as we are at the fag end of the year, and most traders are choosing to stay on the sidelines," said Vijay Sharma, a senior executive vice president at primary dealership PNB Gilts.

"Demand for auction could be the next trigger that may impact, but we are not anticipating any large move in 2023 now."

New Delhi aims to raise 300 billion rupees ($3.60 billion) through a sale of bonds on Friday.

Traders also await the minutes of the Reserve Bank of India's (RBI) December meeting, with focus on the thinking of central bank members about the interest rate trajectory next year.

The RBI had maintained status quo on rates and stance for fifth consecutive time with a cautious tone earlier this month.

The central bank's objective of aligning inflation with its 4% target on a durable basis is far from assured and a failure to do so could risk economic growth, it said in its bulletin on Wednesday.

Market participants are turning cautiously optimistic in terms of interest rates since the Federal Reserve turned dovish in its latest meeting last week.

U.S. yields continued to ease, with the 10-year falling to around 3.85% in Asian hours, its lowest in nearly five months on bets of early Fed interest rate cuts.

Markets now see an over 80% probability of the Fed cutting rates in March. The Fed has projected 75 basis points of rate cuts in 2024, but market has factored in 75% probability of 150 bps of cuts. ($1 = 83.2320 Indian rupees)

(Reporting by Dharamraj Dhutia; Editing by Varun H K)