Notwithstanding the recent correction in gold prices, investors in Sovereign Gold Bonds (SGBs) are still sitting on gains of 34-44 per cent over the past year.

Though the government has stopped fresh issuances, around 45 SGBs, maturing up to February 2032, continue to be traded on exchange platforms. These bonds carry an annual coupon of 2.50 per cent and capture the rise in gold prices, as they are redeemed at the prevailing gold price at the time of maturity. The RBI last issued an SGB in February 2024.

The SGB maturing in February 2032 closed flat on Monday at ₹14,537 per gram, though it was up 34 per cent over the last year. The gold bond maturing in August 2028 gained one per cent, or ₹101, to close at ₹14,093 on Monday.

Interestingly, despite the recent fall in gold prices, the government’s outstanding obligation on SGBs remains substantial at about ₹1.12-1.20 lakh crore.

When the RBI started issuing SGBs in late 2015, gold prices were about ₹25,000 per 10 grams. Since then, they have surged to about ₹1.29 lakh.

In a bid to reduce the attractiveness of SGBs and contain its liabilities, the government, in Budget 2026, allowed capital gains tax exemption only to initial SGB subscribers who hold the bonds till their eight-year maturity period. Investors who purchase SGBs in the secondary market will no longer enjoy capital gains tax exemption.

Rajesh Singla, CEO of Alpha AMC, said that while investors who purchased SGBs directly from the RBI will continue to receive tax-free maturity benefits, secondary-market purchases of bonds on the NSE and BSE will now be taxable at redemption.

The government’s outstanding obligation on SGBs now stands at roughly ₹1.12-1.20 lakh crore across about 130 tonnes of gold, up more than 900 per cent since 2015, he said.

Dr Renisha Chainani, Head of Research at Augmont, said that investing in gold exchange-traded funds (ETFs) would be a better option for fresh gold exposure, especially after the change in the taxation policy for SGBs.

While central banks in Russia and Turkey have been steadily selling gold, China and Brazil have been accumulating the precious metal as part of their foreign exchange reserves, she said.

The pressure on gold prices arising from central bank sales is likely to remain limited because of strong structural demand from other parts of the world, she added.

Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, said gold prices continue to trend lower and are on track for their largest weekly decline since early June, as escalating US-Iran tensions have kept crude oil prices elevated, reinforcing concerns that inflation could remain persistent.

Market sentiment remained cautious after another round of US strikes on Iranian targets and attacks on an oil tanker near Iran’s main export terminal heightened fears of prolonged supply disruptions, thereby supporting oil prices, he said.

Published on July 20, 2026