MANAPPURAM, MUTHOOT FINANCE SHARES RISE UP TO 4% AFTER GOLD SCALES OVER 2-MONTH PEAK ON US TREASURY MOVE

Shares of gold-loan companies Manappuram Finance and Muthoot Finance gained 2%, respectively, on Thursday as gold prices climbed to their highest level in more than two months. The rally in bullion was supported by lower US Treasury yields and a weaker dollar. Higher gold prices are positive for gold-loan lenders as they increase the value of the collateral pledged by borrowers. This can support higher loan disbursals while also providing lenders with greater protection against credit losses. While Muthoot Finance gained 4%. IIFL Finance also traded 1.4% higher. The rise in gold prices came after the US Treasury Department announced on Wednesday that it would double the size of its liquidity-support buyback operations for longer-dated notes and bonds. The move followed a sharp sell-off in the bond market, as investors sought higher returns amid rising inflation concerns linked to the US-Israel conflict with Iran. However, analysts cautioned that gold's recent rally may not continue in a straight line. A sustained uptrend will depend largely on whether the decline in bond yields persists and whether inflows into gold exchange-traded funds broaden. Inflation concerns also intensified following the Federal Reserve's meeting last month. Minutes released on Wednesday showed that several policymakers were open to raising interest rates. Markets are currently pricing in a 67% probability that the Federal Reserve will keep interest rates unchanged in September, while the probability of a rate hike stands at 33%, according to the CME FedWatch Tool. Gold is traditionally viewed as a hedge against inflation and economic uncertainty. However, higher interest rates can weigh on demand for the non-yielding asset by increasing the attractiveness of interest-bearing investments.