Manappuram, IIFL Finance, other gold financier stocks rise up to 6% as precious metal hits new record highs

Gold financier stocks hit fresh 52-week highs

• Gold financier stocks hit 52-week highs as gold prices reach lifetime records
• Geopolitical tensions and Fed rate cut bets boost gold's safe-haven demand
• Rising gold prices increase collateral value, reducing loan default risk

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Gold financier stocks jumped in trade on December 24 as gold prices soared to lifetime highs amid escalating geopolitical tensions and expectations of more rate cuts by the Federal Reserve.

Manappuram Finance shares jumped 6 percent to hit a fresh 52-week high of Rs 313.8 apiece in the morning. IIFL Finance shares jumped 4 percent to a 52-week high of Rs 597.70 apiece.

Muthoot Finance shares also rose over 2 percent to hit a fresh 52-week high of Rs 3,890 apiece.

Soaring gold prices:

Gold futures with February expiry on the Multi Commodity Exchange of India (MCX) hit a fresh lifetime high of Rs 1,38,676 per 10 grams today. The futures with April and June expiry also hit fresh all-time highs of Rs 1,42,125 per 10 grams and Rs 1,45,579 per 10 grams earlier today.

Frictions in Venezuela, where the US has blockaded oil tankers, have added to the metal’s haven appeal as it heads for its best annual performance since 1979.

Spot gold also soared as rising geopolitical risks boosted safe-haven demand. “The U.S. deployed a significant number of special operations aircraft, troops, and equipment to the Caribbean this week, expanding Washington’s broader military options regarding Venezuela. This development kept investors cautious and supportive of bullion prices,” said Axis Securities.

Traders are also betting the US Federal Reserve will cut interest rates further the upcoming year, which would be a tailwind for non-yielding precious metals.

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.

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