Muthoot, Manappuram Finance shares fall up to 7% after Gold prices extend losses

As gold prices slid 12% in the spot market, shares of gold financing companies such as Muthoot Finance Ltd. and IIFL Finance Ltd. fell as much as 8% in early trade on Sunday, February 1, before recovering partially from the day's lows.

Manappuram Finance was trading 2% lower at ₹278.70, while Muthoot Finance was down 6.06% at ₹3,596.

Gold and silver prices opened 6% lower each on the Multi Commodity Exchange after a sharp overnight sell-off in global markets and later extended losses to 9%.

The correction followed an exceptionally volatile session on Friday, when silver plunged as much as 37% intraday and gold dropped 12% in the spot market.

The fall in gold marked its steepest single-session decline since the early 1980s, while silver recorded its sharpest fall on record.

Part of the price adjustment is expected to be reflected in ETFs as well, especially since the bulk of the global sell-off unfolded after Indian equities had closed.

Domestic prices reflected the sharp correction, with gold trading at ₹1,36,185 per 10 gram and silver at ₹2,65,652 per kilogram.

In global markets, bullion prices collapsed on January 30, as fears around a less-independent Federal Reserve eased following the nomination of Kevin Warsh as Fed Chair.

The development triggered a sharp rally in the US Dollar, leading to one of the biggest declines in bullion prices in decades.

Gold had rallied through 2025 and into January amid concerns that the Federal Reserve could lose its independence once Jerome Powell's term ends in May.

Speculation that White House National Economic Council Director Kevin Hassett, a vocal advocate of lower interest rates, was a frontrunner for the role had further fuelled the rally.

However, Warsh, despite recently supporting lower rates, is widely viewed as an inflation hawk. His appointment helped ease fears of the central bank aligning too closely with the White House, triggering a strong rebound in the US Dollar and accelerating the sell-off in gold.

A stronger US Dollar typically weighs on gold and silver, as it signals higher interest rates and reduces the appeal of non-interest-bearing assets such as bullion.