Gold Loan Stocks Gain As Bullion Hits Three-Month High On Weaker Dollar

Shares of gold financing companies moved higher during Monday’s session after gold extended its recent rally in international markets. Muthoot Finance led the gains among the three stocks, rising 4.4% to ₹3,153 apiece at 10 am, while Manappuram Finance and IIFL Finance advanced 2.7% and 2.2%, respectively.

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Gold Price Rises Further

Spot gold gained 0.8% to $4,639.64 an ounce at 10:08 am in Singapore on August 24, after rising 1.9% on August 21. The metal has now posted gains for three consecutive weeks, with an increase of more than 5% last week.

The latest advance followed a surprise announcement by the U.S. Treasury to increase purchases of longer-dated government debt. The move pushed bond yields and the U.S. dollar lower, improving the appeal of bullion.

Treasury Secretary Scott Bessent subsequently indicated that the administration could increase purchases of higher-cost debt. He also said a fiscal measure aimed at addressing elevated borrowing costs would be announced soon.

Gold ETFs See Strong Inflows

Investment demand has also strengthened alongside the gold price. Gold-backed exchange-traded funds tracked by Bloomberg added more than 28 tonnes last week, marking their largest weekly inflow since January.

Christopher Wong, a strategist at Oversea-Chinese Banking Corp, said the inflows indicated broader participation in the gold market. He also identified higher real yields and a recovery in the U.S. dollar as key near-term risks to the metal.

Gold’s latest move has taken it above its major moving averages, including the 200-day average of around $4,513 an ounce. The level is closely watched in technical market analysis.

Dollar Weakness Supports Bullion

The decline in the U.S. dollar has been an important factor behind the latest gold rally. A weaker dollar generally makes bullion more affordable for buyers holding other currencies.

Bart Melek, global head of commodity strategy at TD Securities, told Bloomberg that the dollar’s decline had been a significant driver of the recent move. He also pointed to technical factors behind the metal’s strength.

Billionaire investor Ray Dalio separately wrote on LinkedIn that investors should reduce their bond exposure and consider allocating as much as 15% of their portfolios to bullion as protection against risks surrounding U.S. government debt.

Gold Loan Stocks Remain In Focus

The rise in the gold price has kept shares of gold financing companies on investors’ radar. Muthoot Finance, Manappuram Finance and IIFL Finance all moved higher during Monday’s trading session.

The Muthoot Finance share price was ₹3,153 at 10 am, up 4.4%, while Manappuram Finance and IIFL Finance recorded smaller gains. The movement in these stocks came alongside continued strength in the gold market, with bullion reaching its highest level in more than three months