Gold holds near $4,000 as China ends key tax rebate for retailers
Gold prices steadied around $4,000 an ounce on Monday after a volatile start, following China’s decision to scrap a long-standing tax rebate for some retailers — a move that could weigh on demand in one of the world’s largest precious metals markets.
Spot gold rose 0.1% to $4,004.73 an ounce as of 12:55 p.m. in Singapore, after falling as much as 1% earlier in the day, News.Az reports, citing Bloomberg.
The Bloomberg Dollar Spot Index was little changed.
Beijing announced on Saturday that retailers will no longer be allowed to offset value-added tax (VAT) when selling gold purchased from the Shanghai Gold Exchange (SGE) or Shanghai Futures Exchange (SFE), whether sold directly or after processing. The decision triggered sharp declines in Chinese jewelry stocks — Chow Tai Fook Jewellery Group Ltd. dropped as much as 12%, Chow Sang Sang Holdings International Ltd. fell over 8%, and Laopu Gold Co. slipped more than 9%.
Citigroup analysts, including Tiffany Feng, said the policy change would likely push retailers to raise prices to absorb added cost pressures. Under the new rules, which will remain effective until the end of 2027, only SGE and SFE members selling gold as investment products will retain full tax offsets. For non-investment gold such as jewelry or industrial goods, sellers can now offset just 6% of input VAT instead of 13%.
Gold reached a record high in October amid a retail buying frenzy but has since pulled back. Despite the recent dip, prices remain up more than 50% year-to-date, supported by central bank purchases and safe-haven demand.
Elsewhere in the metals market, platinum climbed as much as 1.5%, silver edged higher, and palladium traded flat.
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