gold prices
After banning rare earth, the Chinese government has now made gold its weapon to threaten the world in its own way. China, the world's largest gold consumer, has now abolished the old tax exemption. This is going to cause a big blow to the global gold market including India. According to the latest rule of China's Finance Ministry, VAT exemption will not be available on gold purchased from retail Shanghai Gold Exchange from November 1, 2025. This will apply to high purity bars, ingots and People's Bank of China approved coins, whether sold directly or processed. It is estimated that due to this decision, gold prices may increase by 3 to 5 percent.
With this step, buying gold in China will become costly. Due to omission of tax, the retail price may jump by 3% to 5%, which will directly hit the customer's pocket. There is a chance of a dip in the sales of gold jewelery and investment items.
Why was this decision taken?
Experts are saying that the Chinese government has taken this move when the real estate sector is slow and economic growth is weakening. Removing tax benefits will help the government exchequer, but local demand may get hit.
Turmoil in the global gold market
The effect of this decision will be visible in the world market also. There have been tremendous swings in the gold price in the last months. In the beginning of October, gold had broken the record of $ 4,000 per ounce but now a light correction has come. Investment in gold ETF is also decreasing.
Impact on Indian market?
Some analysts predict that gold may reach US$5,000 in a year. Due to recent profit booking, gold on MCX became cheaper by Rs 12,000 to Rs 1.21 lakh per 10 grams. Some recovery was seen on Friday. This decision of China may again bring bullish movement in the Indian market.
