India’s Reserve Bank to sell sovereign gold at ₹5,117 per gram in the latest sovereign gold bond tranche

India’s Reserve Bank to sell sovereign gold at ₹5,117 per gram in the latest sovereign gold bond tranche
Written by:
Gannicus Oliver
31st August, 09:25
  • RBI is set to issue the sixth tranche of sovereign gold bond on Monday (today) till September 4.
  • Investors applying in opposition to applying locally will get a reduction of ₹50 per gram.
  • The sovereign bonds are restricted for sale to individuals, HUFs, Trusts, among others.

The Reserve Bank of India (RBI) hastened the speed for investors to invest in the sixth tranche of the sovereign bond. The move comes a few days after RBI began its Special Market Operation of simultaneous purchase and sale of the Government’s securities.

The sale of gold by RBI opens on Monday (today) and ends on the 4th of September. The India Bullion and Jewelers Association stated that the bond’s nominal price solely relies on the simple average closing price.

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Investing in sovereign gold till bonds’ maturity will profit investors

Investors applying online through digital mode are entitled to get a discount of ₹50 per gram, which means that they will only buy gold at ₹5,067 per gram. At the moment, the worth of gold is ₹51,208 per 10 grams in the futures market. However, only RBI issues sovereign gold on behalf of the Indian government.

Nish Bhatt, Founder & CEO, Millwood Kane International, said:

“Investing in Gold has been a fruitful investment this year as rates have risen over 30% despite the fall in gold prices in the last few weeks”

He elaborated,

“A sovereign gold bond is an effective way to invest in non-physical gold, wherein an investor does not have to worry about the storage of gold as it is in a Demat form, and there are no local taxes that a buyer needs to pay if buying physical gold. Investment in SGB comes with an assured 2.5% pa interest payable to the investor, and there is a discount of ₹50/gm for online investment,”

Bhatt further added that,

The US Fed signaling a relaxed stance on inflation, an extended period of low rates acts as a support to Gold prices. Going forward to the US government’s action on the next economic stimulus package, the trajectory of the US Dollar, and how governments worldwide control the virus will guide gold prices.”

It is essential to know that the sovereign bonds are restricted for sale to individuals, Hindu Undivided Families (HUFs), Trusts, Universities, and Charitable Institutions.

The gold bond will be sold through banks (except small finance banks and payment banks), Stock Holding Corporation of India (SHCIL), designated post offices, and recognized stock exchanges (NSE and BSE).

The sovereign bond gold project was first issued in November 2015 to reduce demand for physical gold and divert domestic funds used to purchase gold to financial savings.

As things stand, investing in sovereign gold is profitable for investors until the bonds’ maturity.

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