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Informist, Tuesday, Sept. 2, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of gold on the Multi Commodity Exchange of India and the COMEX rose Tuesday due to growing expectations of an interest rate cut by the US Federal Reserve this month. Market sentiment was also lifted as escalation in the Russia-Ukraine war increased the safe-haven appeal of the precious metal.

At 1647 IST, the most-active December GOLD contract on the COMEX was 1.1% higher at $3,554.4 per ounce. The most-active October gold contract on the MCX was up 0.2% at INR 101,780 per 10 grams. Gold prices on COMEX rose to a new record high of $3,578.4 per ounce earlier in the day. On the domestic exchange, gold prices have risen for 10 consecutive sessions.

Traders now see a 92% probability of a 25-basis-point rate cut by the Fed this month, higher than 86% a day ago, according to the CME's FedWatch tool. Lower rates increase the appeal of the non-interest-yielding precious metal. Gold's trajectory is now hinging on how closely the Fed's policy path aligns with market projections, Kotak Securities said in a report. "...gold continues to benefit from strong fundamental drivers, including persistent central bank purchases, safe-haven inflows amid trade and geopolitical uncertainty...," it said.

However, the gains in gold were capped because of a rise in the dollar index on Tuesday . At 1704 IST, the dollar index, which measures the strength of the greenback against a basket of six currencies, was up 0.7% at 98.39. A stronger dollar makes dollar-denominated commodities such as gold expensive for those holding other currencies, denting demand.

"The current environment benefiting gold is evidenced by the strong inflows into gold ETFs (exchange-traded funds), totalling 30 tons over the past four trading days," Thu Lan Nguyen, head of forex and commodity research at Commerzbank, said in a report. "The world's largest gold ETF recorded its biggest one-day inflow on Friday since the tariff chaos in April. As it is, the chances are good that gold could climb further in the coming months," Nguyen added.

Silver contracts were steady on the MCX but up on COMEX. At 1719 IST, the most-active December silver contract on the MCX was steady at INR 122,560 per kilogram. The same-month contract on COMEX was up 2% at $41.55 per ounce. Silver prices have also surged recently, reaching a record high on MCX and a 14-year high on COMEX Monday, because of expectations of a Fed rate cut and firm industrial demand for the metal.

Market participants are now waiting for a slew of US jobs data this week, which could determine the Federal Open Market Committee's rate decision later in the month. ISM's manufacturing purchasing managers' index data is due later in the day, along with services PMI and non-farm payrolls report later in the week.

Outlook for the rest of the session:

--MCX gold seen at INR 103,257–INR 106,419 per 10 grams

--COMEX gold seen at $3,510.0–$3,580.0 an ounce

--MCX silver seen at INR 120,969-INR 127,171 per kg

--COMEX silver seen at $41.00-$42.00 an ounce

End

US$1 = INR 88.16

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

Edited by Avishek Dutta

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