Gold on a new high: What’s next for gold-related stocks this festive season?

The yellow metal has been hitting record highs for quite some time. Gold surged past $3,600 an ounce in international markets for the first time on the back of expectations of a rate cut by the US Federal Reserve after US labour data showed softness, making gold a better investment option than US government bonds, analysts said.

Friday's jobs report showed U.S. employment growth slowed sharply in August. Traders now see an 88% chance of a quarter-point rate cut at the Fed's September meeting, with around a 12% chance of a larger 50 bps cut, according to the CME FedWatch tool, news agency Reuters reported.

Gold prices are up 37% so far this year, after gaining 27% in 2024, bolstered by dollar softness, strong central bank buying, dovish monetary settings and heightened global uncertainty. China's central bank extended its gold-buying streak to a 10th straight month in August, official data showed on Sunday.

In the domestic futures market, gold touched an all-time high of ₹1,10,047 per 10 grams on Tuesday, mirroring gains in the international markets.

On the MCX, the yellow metal futures for December delivery appreciated ₹458, or 0.41%, to hit a lifetime high of ₹1,10,047 per 10 grams.

Also, the most traded gold futures for October delivery increased ₹482, or 0.44%, to hit a record peak of ₹1,09,000 per 10 grams on the Multi Commodity Exchange (MCX).

Amid gold hitting record highs ahead of the festive season, shares of most of the jewellery makers were trading with a negative bias. Shares of Titan declined 0.77%, Kalyan Jewellers declined 1.37%, PC Jeweller dropped 2%, Senco Gold fell 1.08%, Goldiam International declined 1%, Sky Gold fell 2.4%, and Shanti Gold declined 1.57%.

Analysts say that the higher price of gold in international markets will lead to margin contraction for most of the companies in the jewellery space.

"In the near term, ahead of the festive season, there will be margin contraction for gold jewellers as the raw material cost has gone up sharply for them," market expert Avinash Gorakshakar told Upstox News.

Gorakshakar added that companies that procured gold at lower levels can manage to navigate the margin challenge, but for those buying at current levels, they will see margin pressure.

Gorakshakar added that gold loan companies such as Muthoot Finance and Manappuram, however, stand to benefit from surging gold prices as the loan-to-value for them will go up.