Gold loan stocks jump 7% as gold crosses Rs 1.6 lakh per 10 gm

Shares of gold loan companies Muthoot Finance, Manappuram Finance and IIFL Finance gained 5-7% over two sessions after gold prices on the MCX crossed Rs 1.6 lakh per 10 grams for the October contract. The rise was supported by a weaker dollar and the US Treasury's bond-buyback announcement, which pushed yields lower.

Higher gold prices increase the value of collateral pledged against loans, making such lending more attractive and requiring borrowers to pledge less jewellery for the same amount. Muthoot Finance shares rose 3% to Rs 3,047, Manappuram Finance gained 2%, and IIFL Finance rallied 6% on Friday alone.