Shares of gold financing companies rallied sharply on December 24 as gold prices climbed to lifetime highs, driven by rising geopolitical tensions and expectations of further interest rate cuts by the US Federal Reserve.
Manappuram Finance emerged as the top gainer, with its stock jumping over 6% to hit a fresh 52-week high of ₹313.8 in morning trade. IIFL Finance shares advanced nearly 4% to a new 52-week high of ₹597.7, while Muthoot Finance rose more than 2% to touch a record high of ₹3,890 per share.
The rally followed a sharp surge in gold prices on domestic commodity exchanges. Gold futures with February expiry on the Multi Commodity Exchange (MCX) scaled a lifetime high of ₹1,38,676 per 10 grams. Futures contracts for April and June expiry also touched new all-time highs of ₹1,42,125 and ₹1,45,579 per 10 grams, respectively.
Gold’s strong momentum is being supported by escalating geopolitical risks, particularly tensions surrounding Venezuela after the US reportedly blockaded oil tankers, enhancing the metal’s safe-haven appeal. The precious metal is now headed for its strongest annual performance since 1979.
Spot gold prices also climbed as investors turned cautious amid global uncertainties. According to Axis Securities, increased US military deployments in the Caribbean have widened Washington’s strategic options regarding Venezuela, keeping investors supportive of bullion prices.
In addition, market participants are betting on further interest rate cuts by the US Federal Reserve in the coming year, a development that typically benefits non-yielding assets like gold.
Rising gold prices are positive for gold financing companies, as higher collateral values reduce credit risk and improve loan-to-value dynamics, supporting profitability and asset quality.
Disclaimer:
This content is for informational purposes only and should not be construed as investment advice.
