Amid stock market breakout, sovereign gold bond sales hit record Rs 4,600 crore in June

The Sovereign Gold Bonds (SGB) sales hit a record Rs 4,604 crore in June with Indians purchasing a whooping 7.77 tonnes. Investors settle for gold as this acts as an hedge fund against inflation and a safe-haven asset at times of global uncertainty amid the stock market breakout.

Gold has been outperforming the equities market. Last month the bonds were purchased at Rs 5,926 per gramme which was the highest issue price since the introduction of SGB. This was an increase of almost 10% from the December 2022 series, which had an issue price of Rs 5,409 per gramme. In comparison, Nifty has returned a 6% gain in the year through June at 19,189.5 points.

In 2022 too gold had outperformed the market returning a 13% gain while Nifty gave a return of just 4.3% last year.

The RBI launched the SGB scheme on behalf of the Indian government. The scheme has seen an average subscription of 1.72 tonnes across 64 series in the seven years and seven months since its introduction as an alternative to physical gold in 2015. SGB prices also exclude the 3% goods and services tax on Gold.

Experts believe that the metal will generate at least 5% more from the last issue price of ₹5,926 per gramme by the end of 2023. By this, the issue price could reach at around ₹6,200 by 2023-end excluding 3% GST.