Manappuram Finance, Muthoot Finance, other gold financier stocks drop up to 3%. Here’s why

Manappuram Finance shares tumbled nearly 3% to trade at Rs 309.35 apiece on NSE, while those of Muthoot Finance and IIFL Finance fell over 2% each.

The dollar index, which tracks the US currency against a basket of six major peers, climbed to a more than one-year high on Wednesday and traded around 101.5 on Thursday. The move reflects growing expectations of a hawkish US Federal Reserve, with traders increasing bets on an interest rate hike later this year.

The US Federal Reserve kept interest rates unchanged at its latest policy meeting, but a larger number of policymakers signalled the possibility of higher borrowing costs later in the year amid concerns over inflation remaining above the central bank’s 2% target. In the first FOMC meeting under Chairman Kevin Warsh, the Fed noted that inflation remained elevated relative to its goal, partly due to supply shocks that have pushed up prices in sectors including energy.

According to the CME FedWatch Tool, traders are now expecting three rate hikes this year and see roughly a 67% probability of a hike in September. While gold is traditionally seen as an inflation hedge, it loses its appeal as a non-yielding asset in a high-interest-rate environment.

Gold futures in MCX extended their decline. Gold futures for August 2026 delivery have declined by Rs 5,863 in two days to Rs 1,40,666 per 10 grams. In the international market, spot gold slipped 0.4% to $3,985.89 per ounce by 0043 GMT, after falling to its lowest level since November 2025 on Wednesday.

Live Events

US gold futures for August delivery were down 0.2% at $4,001.60. Bullion dropped below the key $4,000-an-ounce mark on Wednesday for the first time since November 2025.
Also read: Gold prices fall Rs 6,000/10 gram in two days; silver tanks Rs 15,500/kg on rate hike fears. Time to sell precious metals?

Manappuram Finance, Muthoot Finance and IIFL Finance provide loans with gold as collateral. Falling gold prices will reduce the value of the pledged collateral. Since gold loans are sanctioned based on the per-gram valuation of gold, lower prices will require borrowers to pledge additional jewellery to access the same loan amount.

“As investors face losses in equities, many are selling liquid assets such as gold to raise cash, meet margin requirements, and reduce leverage. At the same time, money is flowing into the US dollar, with the stronger dollar adding further pressure on bullion prices. This is one of those rare periods where both equities and gold are declining together as investors sell what they can rather than what they want,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.Manoj Kumar Jain of Prithvi Finmart said gold and silver prices are likely to remain volatile this week amid fluctuations in crude oil prices and the dollar index, as well as ahead of the release of US GDP and Core PCE price index data.

According to Jain, gold has support at $3,980-$3,920 per troy ounce and resistance at $4,040-$4,085, while silver has support at $55.50-$53.80 and resistance at $60.00-$61.40 per troy ounce in the current session.

Also read: Vedanta, NALCO, Hindustan Zinc shares fall up to 3% as silver, aluminium, other metal prices tumble. Here’s why

(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)