How is the price of SGB determined?
The pricing of Sovereign Gold Bonds (SGBs) involves two key stages: the issue price at the time of purchase and the market price after listing. Both are governed by different mechanisms.
1. Issue price at subscription
- The Government of India determines the initial issue price.
- It is calculated based on the average closing price of gold of 999 purity published by the India Bullion and Jewellers Association (IBJA) over the last three working days preceding the subscription week.
Example:
For SGB Series IV of FY 2022–23, the issue price was ₹5611 per gram.
2. Market price after listing
Once SGBs are listed on the stock exchange, their price is influenced by market forces and may differ from the issue price. Key factors include:
- Global and domestic gold prices
- Prevailing interest rates
- Inflation expectations
- Demand and supply dynamics in the bond market
What if...
| Scenario | Resolution |
|---|
| The market price is below the issue price | This is normal due to trading dynamics. If held till maturity, you'll still receive the original value and interest. |
| You want to invest when gold prices are volatile | Consider dollar-cost averaging across series or monitor upcoming issues for favorable pricing. |
Holding SGBs till maturity ensures you receive the face value along with the 2.5% annual interest, regardless of market fluctuations.
Last updated: 26 Jun 2025
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