Investors in sovereign gold bonds have more than doubled their investments as the yellow metal has been hitting new highs in the last few months.
RBI has announced a schedule for premature redemption for 28 SGBs till March 26. These bonds were issued between May 2018 and March 2021. While SGBs are issued for eight years, they can be redeemed prematurely after five years from the date of issue.
For the latest repurchase of SGBs, RBI has fixed a price ₹10,070 a unit. Investors who bought these bonds issued in September 2009 at ₹4,070 per gram, have gained ₹6,000 per unit or 147 per cent. This is excluding the 2.5 per cent annual interest.
The redemption price will be calculated based on the simple average closing price of gold of 999 purity, published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days.
SGB offers the dual benefit of gold price appreciation and a fixed annual interest of 2.5 per cent paid semi-annually. While most investors hold them till maturity to enjoy long-term tax-free gains, some prefer to redeem early to meet their liquidity needs.
N.S. Ramaswamy, Head of Commodities, Ventura, said anecdotal evidence suggests that investors are not opting for premature redemption because they expect gold prices to firm up further, and it continues to yield an interest of 2.5 per cent.
RBI has scheduled three bonds for next month. Since April, RBI has opened up premature redemption for 34 SGBs issued between October 2017 and September 2020.
Dr Renisha Chainani, Head of Research, Augmont, said investors can look at buying SGBs in the secondary market, especially, if they are at a discount to the current gold price.
Unlike ETFs or mutual funds, SGBs provide an additional annual interest of 2.5 per cent on the initial investment, in addition to capital appreciation related to gold prices, he said.
SGB holders who redeem their SGBs at maturity (8 years) will also receive tax-free capital gains. Overall, as a long-term risk-averse investor in SGBs, buying SGBs potentially at a discount in the secondary market would be a smart option, he added.
Published on August 22, 2025