Here Is How Sovereign Gold Bond Price Is Calculated

Gold Bond Scheme: An issue price of Rs 5,051 per unit was applicable to the seventh tranche of gold bonds, which ended for subscription on October 16. But how are these rates calculated? Here's how.

Here Is How Sovereign Gold Bond Price Is Calculated

The next tranche of Sovereign Gold Bonds will open for subscription for five days in November

The Sovereign Gold Bond (SGB) scheme, which was open this week, will open for subscription next for five days starting November 9, and four more times in the current financial year which ends in March 2021. The issue price of these gold bonds is linked with the market price of the yellow metal in the spot market, and is arrived at using a simple average of prices provided by Mumbai-based industry body IBJA or India Bullion and Jewellers Association. For example, an issue price of Rs 5,051 per unit was applicable to the seventh tranche of gold bonds, which ended for subscription on October 16.

Issue Prices Of Series I-VII Gold Bonds  

Series (2020-21)DatesIssue Price
IApril 20 - April 24Rs 4,639
IIMay 11 - May 15Rs 4,590
IIIJune 8 - June 12Rs 4,677
IVJuly 6 - July 10Rs 4,852
VAugust 3 - August 7Rs 5,334
VIAugust 30 - September 4Rs 5,067
VIIOctober 12 - October 16Rs 5,051

Closing rates of three days prior to the first day of subscription are taken into account to arrive at the issue price. For the seventh tranche, the issue price of Rs 5,051 is calculated based on IBJA rates of October 7-9. 

DateClosing Price (Per Gram)
October 7Rs 5,028.70
October 8Rs 5,036.90
October 9Rs 5,087.80
AverageRs 5,051.13
(Source: ibjarates.com)

The issue price is announced by the Reserve Bank of India ahead of the launch of subscription window for each tranche. 

Those subscribing to gold bonds online get a discount of Rs 50 per unit. For example, bonds under Series VII were available online at Rs 5,001 per unit.

What Are Sovereign Gold Bonds?

Launched first in 2015, the Sovereign Gold Bond scheme is aimed at enabling investment in non-physical gold, wherein the RBI issues bonds linked to the market price of gold on behalf of Government of India.  

Each unit of the bond in the SGB scheme represents the current value of a gram of gold.

The bonds have a maturity period of eight years. (Know More About Gold Bonds