Another SGB series delivers over 200% returns as gold’s relentless bull run continues to impress investors

The Reserve Bank of India set the final redemption price for the Sovereign Gold Bond (SGB) 2017-18 Series II, which matured on July 28, 2025, at ₹9,924 per gram. Issued in 2017, these bonds were purchased by investors at ₹2,830 per gram, marking a stellar 250.67% return over the last eight years.

Notably, this over 250% return from SGB in eight years excludes the additional 2.5% fixed annual interest paid semi-annually, making it one of the most prudent investment choices for retail investors during that period.

In 2024, the government of India paused new sovereign gold bond issues due to soaring gold prices, making the bonds more expensive and less cost-effective for the centre. As it turns out, the decision was on the right track, as the gold price has jumped over 25% just this year, and has crossed the ₹1 lakh mark multiple times.

Currently, gold prices are at around ₹99,000 per 10 gram (24K). The precious metal was at nearly ₹64,000 in 2024, making it a wild run for gold this year.

After the Sovereign Gold Bonds (SGB) 2018-19 Series-V, for which the premature redemption rate was set at ₹9,820 per gram, delivered a mega 205% return on investment, the centre’s decision to move away from issuing new SGBs ended up being a sharp move. It seems as if the government ended up dodging a bullet, saving itself from rising liabilities tied to surging gold prices and unexpected fiscal pressure.

Gold’s bull run and future outlook

Gold is a safe-haven asset, which means that geopolitical tensions and market volatility, among other factors, hugely impact its prices. Investors run to the precious metal when other investments turn risky, making it highly volatile but attractive in the market.

In present times, the high inflation rate worldwide and consistent uncertainty in geopolitical situations continue to drive gold higher. Many reports believe gold to remain on the upward trajectory through this year, with global dynamics fuelling its demand.

However, high domestic prices in India have affected the buying, forcing dealers to offer steep discounts to attract buyers, a Reuters report suggested.

“Indian dealers offered discounts of up to $15 an ounce over official domestic prices this week, which include a 6% import and 3% sales tax, up from a discount of up to $10 last week,” Reuters said in its report dated July 25.

Further, the recent trade deal between the US and the European Union (EU) has resulted in a temporary softening in gold’s rise, due to the rise in the US dollar. Easing tariff concerns have led to a slight decline in gold’s demand in the overseas markets, but the precious metal is expected to remain elevated in the long term.