China Ends Gold Tax Break in Key Bullion Market Shift

China Ends Gold Tax Break: Impact on Consumers and Investors

China has ended a long-standing gold tax incentive starting November 1, affecting retailers nationwide. The policy previously allowed offsetting value-added tax (VAT) on gold purchases from the Shanghai Gold Exchange. The new regulation applies to both investment-grade bullion, such as high-purity bars and coins, and non-investment uses like jewelry and industrial materials.

This change aims to strengthen government revenue amid weak economic growth and a struggling property market. However, analysts warn it will likely increase costs for Chinese consumers and dampen retail demand. Meanwhile, global gold markets could see volatility as China represents one of the world’s largest bullion markets.

The policy shift coincides with gold’s recent correction after a record-breaking rally. Global retail buying, fueled by exchange-traded funds, has eased, while trade developments and seasonal patterns also moderated demand. Nonetheless, gold prices remain near $4,000 an ounce, supported by central bank purchases, US interest-rate cuts, and global uncertainties.

Market Outlook and Strategic Implications for Gold

Industry experts expect sustained volatility but anticipate potential upside, with forecasts nearing $5,000 per ounce within a year. The end of China’s tax break may slow local consumption but strengthens bullion’s global appeal as a safe-haven asset.

Investors should monitor shifts in Chinese retail behavior, as reduced incentives could affect demand for bars, coins, and jewelry. Meanwhile, central banks continue strategic purchases, reinforcing gold’s long-term resilience. Global bullion markets may adjust to these changes, creating opportunities for strategic buyers and hedgers.

SuperMetalPrice Commentary:

China’s removal of the gold tax incentive reflects the government’s focus on fiscal consolidation. While it may temporarily reduce domestic demand, global gold prices remain underpinned by structural drivers. SuperMetalPrice expects investor strategies to shift toward international markets and safe-haven bullion, with potential for significant upside over the next 12 months.