Bloomberg reported that the Chinese government has announced the abolition of a long-standing tax cut for gold, marking a turning point in the global gold market, effective November 1, 2025.
Retailers will no longer be allowed to deduct value-added tax (VAT) paid on gold purchases on the Shanghai Gold Exchange when reselling it, whether retail or for processing.
The measure is in accordance with a new law from the Ministry of Finance of the People’s Republic of China, which covers both investment gold and general consumption gold.
Analysts expect that although the measure will increase the cost of purchasing gold for Chinese consumers, factors supporting global gold prices remain.
These factors include gold purchases by many central banks, US interest rate cuts and geopolitical uncertainty.
Currently, gold prices are hovering around $4,000 per ounce, and many experts predict that gold prices could “close to $5,000/ounce” next year.
In conclusion, China’s VAT reduction could push up the cost of gold in China and affect the global gold market structure, while gold is still considered a safe haven by investors, which could lead to higher gold prices in the long run.
Sources: Ministry of Finance of China, Bloomberg, bangkokbiznews