Bearish Risk: Gold Price Drop to ₹1.27 Lakh May Hit Muthoot, Manappuram

Gold prices experienced a significant decline last week, settling at ₹1,44,825 per 10 gm, primarily due to a strengthening US dollar and an increase in crude oil prices. This downward pressure is projected to continue, with forecasts suggesting a potential drop to ₹1.27 lakh.

This trend is significant for Indian markets as gold is a traditional safe-haven asset and a major investment avenue. A sustained fall in gold prices, driven by global macro factors, could lead to a shift in investor preference towards other asset classes, impacting companies whose business models are tied to gold's value.

Gold financing companies like Muthoot Finance (MUTHOOTFIN) and Manappuram Finance (MANAPPURAM) are likely to face negative sentiment as lower gold prices reduce collateral value and potentially impact loan book growth. Jewelry retailers such as Titan Company (TITAN) and PC Jeweller could also see negative pressure if consumer demand for gold as an investment wanes.

Traders should monitor the US dollar index and crude oil price movements, as these are key drivers for gold prices. Also, keep an eye on RBI's stance on inflation and any domestic policy changes that might influence gold demand or import duties. Observe the quarterly results of gold loan companies for any impact on their asset quality and profitability.

• •Gold prices fell significantly last week, finishing at ₹1,44,825 per 10 gm.
• •The decline was attributed to a strong US dollar and rising crude oil prices.
• •Forecasts suggest gold price in India may drag to ₹1.27 lakh.