Bullion dealers said the bond sale that closes on September 4 may not see the kind of demand the previous issue in August had reported.
Bonds worth nearly 6.34 tonnes of gold were subscribed to by investors in the fifth tranche of the 2021 issue — the highest since the programme was launched in November 2015. The Reserve Bank of India had fixed the price of gold at Rs 5,334 per gram for the fifth tranche. For the sixth, the central bank has pegged the price at Rs 5,117 as gold prices have fallen from early August. The RBI gives an option for a Rs 50 per gm discount if an investor buys the gold bond digitally.
Talking to ET, Surendra Mehta, national secretary, India Bullion & Jewellers Association, said: “The subscription for the sixth tranche will be good but not as good as the fifth tranche since gold prices have corrected from the levels of Rs 57,000 per 10 gm. Gold prices are under pressure now. Generally, the trend is that if gold prices move up investors start buying in anticipation that prices will further move up.”
However, Shekhar Bhandari, president, global transaction banking, Kotak Mahindra Bank, said sovereign gold bond was a long-term investment. “Investors generally do not look at short term gains when they buy sovereign gold bonds. This time too, gold bonds will receive good response since gold price will go up in coming days,” he said.
The sovereign gold bond scheme was launched in November 2015 with an objective to reduce the demand for physical gold and shift a part of the domestic savings, used for the purchase of gold, into financial savings.
The minimum permissible investment is 1 gram of gold, and the maximum limit is 4 kg for individuals and Hindu undivided families and 20 kg for trusts and similar entities per fiscal year (April-March).
Sriram Iyer, senior research analyst, Reliance Securities, said domestic gold prices had corrected tracking a correction in international prices and an appreciating rupee over the last few sessions. “However, with the demand season approaching, we feel this is the right time to re-enter gold investment, as prices have come off its highs and a restart of another bull run for the next few months is expected,” he said.
The gold bond is being sold through banks (except small finance banks and payment banks), Stock Holding Corporation of India, designated post offices and recognised stock exchanges (NSE and BSE.
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September 01, 2020 at 08:02PM
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As prices correct, analysts cast doubt over sovereign gold bond's demand - Economic Times
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