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Informist, Friday, Aug. 29, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of gold and silver surged to record highs on the Multi Commodity Exchange of India Friday after the rupee fell sharply against the dollar and closed at a record low. Concern over independence of the US Federal Reserve raised the safe-haven appeal of the precious metals while expectations of an interest rate cut by the US Federal Open Market Committee in September also supported the sentiment.

Gold contracts on the domestic exchange had touched an all-time high early Friday and then broke it and rose to another fresh high later in the day. At 1657 IST, the most-active October GOLD contract on the MCX was 0.5% higher at INR 102,570 per 10 grams after touching an intraday peak of INR 102,813 per 10 grams. Similarly, the silver contract for December delivery rose to a fresh record high of INR 119,285 per kg. At 1659 IST, the most-active December SILVER contract was up 0.1% at INR 118,800 per kg on the MCX.

The rupee settled below the psychologically-crucial 88-per-dollar for the first time and ended at a record closing low of 88.1950 against the dollar Friday. When the rupee depreciates against the dollar, prices of gold in the domestic market adjust as the precious metal is priced in rupees.

On the COMEX, prices of both gold and silver edged lower Friday after a sharp rise in the previous session, as market participants await US inflation data later in the day. At 1706 IST, the most-active December gold contract on the COMEX was 0.3% lower at $3,464.0 per ounce. The December silver contract on the COMEX was down 0.6% at $39.47 per ounce.

US Federal Reserve Governor Lisa Cook has filed a lawsuit against US President Donald Trump stating that the president had no right to fire her. The legal battle could challenge established norms on the independence of the US Federal Reserve. The lawsuit also said Trump violated Cook's right to due process because he fired her without a notice or a hearing.

"The reputation and independence of the Fed are at stake. US Vice President Vance added fuel to the fire in the dispute with the Fed. In his opinion, the government will not allow monetary policy decisions to be made without the input from the people who were elected to serve the American people," Carsten Fritsch, commodity analyst at Commerzbank, said in a report. "In other words, Vance is demanding that the US government should have a say in monetary policy. This would mark the end of independent monetary policy. Gold is benefiting from this uncertainty, as shown by inflows into gold ETFs of just under 15 tons (tonnes) in the last two days," Fritsch said.

Expectations of a rate cut by the US FOMC also supported sentiment. "Over the next few months, we anticipate gold prices will remain elevated and only rise further if the US Fed lowers interest rates," BMI, a unit of Fitch Solutions, said in a report. "In the event that the US Fed holds interest rates steady, gold prices would likely suffer a setback down closer to $3,000/oz." Fed fund futures traders now show an 85% chance of a 25-basis-point rate cut by the US FOMC in September, according to the CME's FedWatch Tool.

Outlook for the rest of the session:

--MCX gold seen at INR 101,658–INR 103,842 per 10 grams

--COMEX gold seen at $3,429.0–$3,501.0 an ounce

--MCX silver seen at INR 115,441-INR 119,759 per kg

--COMEX silver seen at $38.87-$40.28 an ounce

End

US$1 = INR 88.19

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Subhojit Sarkar

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