Sovereign Gold Bonds scheme opens for subscription; issue price fixed at Rs 4,852 per gram

The government will open the subscription for Sovereign Gold Bond Scheme from Monday for a period of five days. The issue price has been fixed at Rs 4,852 per gram and an additional discount of Rs 50 per gram has been offered for investors who apply online and make payment through the digital mode.

This will be the fourth tranche of the government-run Sovereign Gold Bonds (SGBs) in this financial year.

"The nominal value of the bond based on the simple average closing price (published by the India Bullion and Jewellers Association) for gold of 999 purity of the last three working days of the week preceding the subscription period...works out to Rs 4,852 per gram of gold," the Reserve Bank of India, that issues the bonds, said in a statement.

The SGBs are a part of government's market-borrowing programme. It was started in 2015 with an objective of reducing the demand for physical gold and shifting a part of domestic savings, used for the purchase of yellow metal, into financial savings

Each gold bond is denominated in multiples of gram(s) of gold with a basic unit of 1 gram, meaning that one bond represents the value equivalent to one gram of gold. 

The subscription opens at a time when the demand for gold is at its peak in the wake of the coronavirus crisis due to the economic slowdown. Due to global uncertainties, investors are looking at gold as a safe haven, leading a rise in its demand and therefore, appreciation.

The bonds will be issued in six tranches from April 20 till September, RBI had announced in April.