Gold financier stocks extended gains on September 2, as the yellow metal continued to trade at lifetime high levels. Gold futures have crossed the key Rs 1.05 lakh per 10 grams-mark on MCX.
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.
Manappuram Finance shares gained nearly 3 percent to trade at around Rs 282 apiece, nearing a record high level after extending gains for the second consecutive session. The stock has now gained more than 8 percent in two days.
IIFL Finance shares gained nearly 2 percent to trade at Rs 447.50 apiece, also extending gains for the second day. Muthoot Finance shares meanwhile gained over 2 percent to hit an intraday high of Rs 2,768 apiece.
Gold futures with October expiry on the MCX hit an all-time high of Rs 1,05,937 per 10 grams yesterday. The contracts are hovering near the record high level today. This comes amid heightened global uncertainties.
A weaker dollar and growing expectations for a U.S. interest rate cut this month are supporting the rising gold prices, said Manav Modi, Analyst – Precious Metal -Research, Motilal Oswal Financial Services.
Analyst expect the bull run in gold prices to continue. "A softer US dollar and renewed safe-haven demand supported the rally, as investors turned to gold amid ongoing uncertainty surrounding US monetary policy. Growing political pressure may accelerate the timeline for interest rate cuts, with markets largely pricing in a 25 bps reduction in September—a development that remains supportive for bullion," said Axis Securities.
Manav Modi from Motilal Oswal Financial Services also noted that the precious metals were up on safe-haven buying. "Along with increasing rate cut expectations, tensions between Israel and Gaza and other geo-political tensions and the tariff escalations are continuously supporting buying in bullions, as increased expectations of a U.S. Federal Reserve interest rate cut this month lifted bullion's allure…Increase in festive and wedding demand, ETF buying and Increased premiums in China are some of the additional factors supporting gold’s bull run," he added.
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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.
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