Gold financier stocks jumped in trade on October 15 as gold continued its record bull run, hitting fresh lifetime high levels. Gold futures with December expiry on MCX touched Rs 1,27,731 per 10 grams for the first time ever.
Gold futures with February and April expiries meanwhile hit fresh lifetime highs of Rs 1,28,879 per 10 grams and Rs 1,30,401 per 10 grams, respectively. The yellow metal has seen a massive rally this year so far.
Why are gold financier stocks rising?
The rising gold prices bodes well for gold financiers, as it increases the value of the collateral while issuing loans. This reduces the risk of default, as the collateral becomes more valuable relative to the loan amount issued against it.
IIFL Finance shares jumped nearly 5 percent to trade at Rs 508.5 apiece, while Manappuram Finance shares rose around 2 percent to trade at Rs 289.3 apiece. Muthoot Finance shares also gained nearly 2 percent to trade at Rs 3,277.5 apiece.
Why gold prices are soaring?
Anticipation of a global downturn, increased trade conflicts between China and US, the US government shutdown, the continuing war between Russia and Ukraine and potential US Federal Reserve actions are all adding fuel to the gold rally fire, said Sandip Raichura, CEO – Retail Broking & Distribution and Director at PL Capital.
"Whether this is a temporary bubble or a longer-term fundamental shift in the international monetary order is difficult to ascertain hence it’s important to keep in mind that corrections may happen at any stage in what could be the start of a historical move in the metal. We continue to advise a 5% allocation at the minimum to the metal even at current prices and believe that unless $3,950 is violated, we are headed towards $4,800 / Oz in the near term. A move below 3950 would violate the near-term bullish view seriously and profit booking may emerge," he added.
Comex Gold extended its rally, gaining nearly 1 percent in the previous session as expectations of a rate cut strengthened following comments from Fed Chair Jerome Powell, who noted that downside risks to employment appear to have increased, said Axis Securities. "His remarks boosted the appeal of precious metals, driving gold prices to a new record high of $4,180 as investors sought safety and ramped up bets on further US monetary easing," it added.
Also read: Our LIVE blog on stock market updates
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
