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“The price for the fourth tranche of SGB (2022-23) is fixed at Rs 5611/gm. The Sovereign Gold Bond was introduced in November 2015, with the key aim of making them an alternative to investing in physical gold. Importing gold to meet domestic demand puts pressure on the currency. SGB being paper gold has proven to be an effective alternative to physical gold. Investors can buy/invest in gold, without any hassles of storage or related cost. Liquidating is more effortless than physical gold as the process is online. The key feature of SGB is the 2.5% interest coupon payable semi-annually, the same is not available in physical gold.

Investment in SGB is directly linked to gold prices, gold prices have risen nearly 2% YTD, 6.6% in the past year, and more than doubled since SGB was introduced in 2015.

Gold prices are likely to face some pressure as central banks have indicated further rate hikes in the remainder of 2023. However, an escalation in geopolitical tensions and a slowdown in the global economy will support gold prices on the upside.”