Gold price exceeds $4000 per ounce

SadaNews - Gold prices have risen above the level of $4000 per ounce even after China ended a long-standing tax exemption for some retailers, a move that could weaken demand in one of the world's largest precious metals markets.

The precious metal increased by 0.14% to approximately $4008.69 per ounce during Asian trading. Beijing announced on Saturday that it would no longer allow some retailers to deduct value-added tax when selling gold purchased from the Shanghai Gold Exchange and futures markets, whether sold directly or after processing.

Gold had jumped to a record high in early October, driven by a frantic buying spree from individual investors around the world, before sharply retreating in the last two weeks of the month.

Prices remain over 50% higher since the beginning of the year, as many fundamental factors driving prices up persist, such as strong demand from central banks and investors' flight to safe haven assets.

Adrian Ash, research director at BullionVault, said: "Although Chinese demand for gold did not play a significant role in this year's record price surge, the tax changes in the world's largest gold-consuming country will negatively affect global sentiment."

He added: "This news may be welcomed by traders and investors hoping for a deeper correction after last month's sharp rise."

Details of the new tax policy

Most manufacturing companies in China had been deducting VAT on inputs when selling to consumers. Under the new policy, which will remain in effect until the end of 2027, the tax incentive will only be retained for members of the Shanghai Gold Exchange and futures markets, including major banks, refineries, and manufacturing companies permitted to participate directly in trading.

The spot gold price rose by 0.1% to $4007.83 per ounce. The Bloomberg dollar index remained broadly unchanged. Silver prices fell, while platinum and palladium prices rose slightly.