The Reserve Bank of India sold sovereign gold bonds worth Rs 1,168 crore in an issue that opened for about seven days in the second week of this month, making it biggest ever sale of such bonds by amount since they were launched in November 2015.
Demand for the yellow metal is still mostly in the form of securitised assets such as gold ETFs and bonds. The government has sold SGBs worth Rs 1990 crore while in April itself net investments in gold ETF stood at Rs.731 crore. In whole of 2019-20, an amount of Rs 2,316 crore was raised via SGB sales.
In the May issue, sovereign gold bond issue price was Rs 4,590 per gram and bonds for 2,544.3 kg (2.54 tonnes) were sold. However, the record sale by value is largely attributable to the high price of the metal in Indian markets. According to industry sources, high net worth individuals and some new retail investors helped boost the sale. However, money raised through the bond sale still falls short of RBI’s expectations.
In terms of amount raised, the previous high was in November 2016, when Rs 1,082 crore was raised by selling 3.6 tonnes equivalent of gold bonds that were priced at Rs 3,007 per gram then.
In April, RBI sold gold bonds worth Rs 822 crore. Interestingly in April, the month in which popular the gold buying festival Akshaya Tritiya falls, bonds and ETFs were a huge attraction. Apart from SGB, very good response was seen in gold ETFs as well. The two instruments combined have attracted a net inflow of Rs 732 crore in April this year, the second highest in last several months after Rs 1,483 net inflow in February this year, according to data by AMFI.
In April, jewellers had shut shop due to the lockdown but started gradual opening this month in green zones, with safety norms in place. April gold ETF assets under management also increased to a six-year high (highest after February 2014) of Rs 9,198 crore, which has doubled in last 12 months. In the past 12 months, net inflow in gold ETFs was 2,344 crore.
