CHENNAI: Shares of gold financing companies Manappuram Finance and Muthoot Finance fell up to 3.5 percent on Friday, reflecting a decline in global gold prices below the $4,000 per ounce mark. Manappuram’s stock traded at Rs 284, while Muthoot’s shares slipped to Rs 2,773 in early trade.
Gold prices, which had previously surged to record levels amid geopolitical tensions, strong central bank buying, and expectations of US interest rate cuts, have recently corrected. This pullback has put pressure on gold-backed financial institutions, as gold loan portfolios are closely tied to the metal’s market value.
Both Manappuram and Muthoot generate a large portion of their revenue from gold-backed loans. A decline in gold prices can affect the valuation of their collateral, the quality of their loan book, and overall investor sentiment, leading to short-term volatility in their share prices.
Market analysts, as quoted in reports, say that while the recent dip in gold prices poses immediate challenges for these companies, the long-term prospects remain stable, provided gold prices stabilise and macroeconomic conditions remain supportive. Investors are advised to track global gold trends and economic indicators closely to gauge potential impacts on the sector.
On Friday, gold prices in India saw a decline across all purities. The price of 24-karat gold fell to Rs 12,229 per gram, down Rs 186 from the previous day. Similarly, 22-karat gold dropped to Rs 11,210 per gram, while 18-karat gold was priced at Rs 9,172 per gram, marking a fall of Rs 139.
Internationally, spot gold slipped to $3,976.65 per ounce, down 1.6 percent from the previous session. The decline was driven by profit-taking following a strong rally in recent days, along with a modest rebound in US equities, which reduced demand for safe-haven assets like gold.
Despite the short-term dip, gold has recorded a gain of nearly 9.4 percent over the past month, supported by geopolitical tensions, a weakening US dollar, and consistent central bank buying. Analysts suggest the recent fall represents a consolidation phase after sustained gains, rather than a reversal of the broader uptrend.
In India, the price correction comes ahead of the festive season, which usually boosts demand for gold. The adjustment may influence both consumer purchases and the performance of gold-backed financial instruments. Therefore, market researchers advise investors to closely monitor global economic developments and gold market trends, as further fluctuations can significantly impact both investment and retail buying decisions.
