SGB 2020-21 Series X Investors Set To Get Nearly 178% Returns Upon Premature Redemption - Check Details

Gold and silver have witnessed a historic rally in 2025 which has extended itself into 2026. On January 19, gold prices climbed to fresh highs, 24-carat gold price grew by Rs 1910 to cost Rs 1,45,690 per 10 grams.

On the other hand, the 22-carat gold price in India surged by Rs 1750 to Rs 1,33,550 per 10 grams. The surge came on the back of renewed safe haven demand on account of fresh tariff tensions and mounting tensions regarding US stance on Greenland.

Amid the price rise, Sovereign Gold Bond (SGB) 2020-21 Series-X-Issue investors are set to make strong gains of nearly 178 per cent as today is the due date for the premature redemption for the tranche. Earlier on January 16, the Reserve Bank of India (RBI) announced the premature redemption price for the tranche.

The SGB scheme was launched in 2015, allowing investors an alternative method of investing in gold in lieu of purchasing the precious metal in its physical form. The bonds were issued by the RBI on behalf of the government. The scheme sought to decrease India’s reliability on imported physical gold and lower the hoarding of gold by transforming domestic savings into financial assets.

SGB 2020-21 Series X Redemption Price

RBI has fixed the price for premature redemption at Rs 14,130 per unit for each gram of gold invested. SGBs have an eight-year long maturity tenure. However, the RBI allows investors to redeem their investment before the date of final redemption. Such redemptions are termed premature redemptions and can only be made after five years from the date of investment on the interest payment dates announced by the central bank.

How Is The Premature Redemption Price Determined

RBI calculates the premature redemption price on the basis of the simple average or mean of the closing prices of gold, three days prior to the date of premature redemption. For the purpose of calculation, RBI uses the price of 999 purity (24 karat gold) as published by the Indian Bullion and Jewellers Association on the last three working days prior to the premature redemption. For the SGB 2020-21 Series X, the price was calculated on the basis of the closing price for January 13, January 14 and January 16. Notably, the price for January 15 was not used as the day was a trading holiday on account of the Maharashtra Municipality polls. The extended rally in gold prices on account of US-Europe trade tensions and safe-haven buying have led to the premature redemption price becoming significantly higher than the issue price.

How Much Money Can SGB 2020-21 Series X Investors Make

The SGB 2020-21 Series X opened for subscription on January 11, 2021 and had a four day-settlement period which concluded on January 15, 2021. The issue was conducted at Rs 5,104 per gram. Based on the redemption price of Rs 14,130, investors are set to make a gain of Rs 9,026 per gram or 176.84 per cent.

The RBI also allowed a Rs 50 discount for investors who applied for the tranche online. Investors who applied online, would have made a profit of Rs 9,076 or 179.58 per cent upon premature redemption. Along with the gains earned upon redemption, SGB investors would have also earned an additional 2.5 per cent semi-annual interest on their sovereign gold bond holdings.

Why Are Gold Prices Gaining

The handsome gains earned by investors from their premature redemption of SGB 2020-21 Series X bonds follow a strong surge in gold prices. Notably, the rally has continued led by a "risk-off" sentiment in global markets, leading to investors pivoting toward gold on account of its safe-haven appeal.

The shift in investor sentiment follows US President Donald Trump’s threat to impose additional tariffs on European countries. The announcement comes amid mounting geopolitical friction between the US and EU regarding Greenland. Additionally the uncertainty regarding US trade policy has led to the US Dollar Index to decline, as gold is priced in dollars, a weaker dollar makes gold a more preferable investment for international buyers.

Apart from Greenland, tensions are also flaring in Iran and Venezuela which have further driven gold prices higher. The combination of these factors has led to international spot gold crossing $4,663 per troy ounce and causing MCX Gold Futures with February 5, 2026 expiry climbing 2.09 per cent to a fresh high of Rs 1,45,500 per 10 gram.