Gold loan NBFC stocks saw renewed selling in Thursday’s trade, 25 June, after gold prices slipped to multi-month lows amid rising expectations of a US Federal Reserve rate hike. Shares of Manappuram Finance fell 3% to ₹309 apiece, while Muthoot Finance shares declined 3.5% to ₹3,027.
These stocks, which emerged among the top performers in 2025 on the back of a record-breaking rally in gold prices, are now caught in a bearish phase and struggling to regain momentum amid the reversal in the gold-price rally.
The sharp correction in bullion prices has raised investor concerns that a sustained decline could lead to higher non-performing assets (NPAs) for gold loan financiers and weigh on their lending prospects.
A steep fall in gold prices could force lenders to offer lower loan amounts against the same quantity of pledged gold, potentially slowing loan disbursements. Another key concern is that if gold prices continue to decline, borrowers may be required to provide additional collateral or repay a portion of their loans, which could result in higher NPAs.
While lenders can auction pledged gold if borrowers fail to meet margin requirements, such measures could increase operating costs and put pressure on profitability. Falling gold prices also tend to reduce the attractiveness of gold loans, potentially dampening fresh demand.
Muthoot Finance down 27% from its peak; Manappuram Finance slips below its recent high
From its record high of ₹4,149 apiece, Muthoot Finance shares have declined 27%. So far in 2026, the stock is down 21%, marking a sharp reversal from the 78% rally witnessed in 2025. Despite the recent correction, the stock had delivered positive returns in each of the last three calendar years.
Meanwhile, Manappuram Finance shares are trading 8% below their recent high of ₹334. Like its peer, the stock also posted positive returns in each of the last three calendar years.
Gold prices tumble over ₹5,000 per 10 grams on MCX
Tracking weakness in global markets, the near-month gold futures contract on MCX fell ₹5,529 per 10 grams in Wednesday’s trade to ₹1,40,928, marking its lowest level since March. After hitting a multi-month low, the metal was trading with modest gains in Thursday’s session.
The yellow metal started the year on a strong note, rising to historic highs in January. However, the rally has since lost momentum, with selling accelerating after the war broke out in late February.
Although oil prices are now declining as the US and Iran are reportedly working towards a permanent peace deal, new Federal Reserve Chair Kevin Warsh surprised markets with a hawkish tone at his first rate-setting meeting last week, putting further downward pressure on bullion.
The strengthening case for a rate hike has supported demand for the US dollar globally, pushing the dollar index to its highest level in more than a year. This has made dollar-priced commodities more expensive for holders of other currencies.
In addition, higher interest-rate expectations continue to support Treasury yields and the dollar, reducing the appeal of non-yielding assets such as gold.
Several major banks have cut their gold forecasts over the past week. Goldman Sachs Group Inc. slashed $500 from its spot gold forecast and now expects bullion to end the year at $4,900 an ounce, while Deutsche Bank AG cut its fourth-quarter estimate by 17%, Bloomberg reported.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
