Gold prices held near $4,000 an ounce after a weak start on Monday, as China ended long-standing tax breaks for some retailers. This change could weigh on demand in one of the world's largest precious metals markets.
Gold bullion prices for immediate delivery were trading little changed by midday in London, after falling as much as 1% in early trading. Beijing announced on Saturday that it would no longer allow some retailers to fully offset value-added tax when selling gold they purchased from the Shanghai Gold Exchange and the Shanghai Futures Exchange. The news sent Chinese gold jewelry stocks plummeting.
Under the new policy, companies producing so-called non-investment gold, such as for jewelry or industrial applications like electronics, can only offset 6% VAT, down from 13% previously. Companies that are not members of the exchanges will be subject to the same change when they sell investment products, including gold bullion.
Gold surged to a record high in October, driven by a surge in retail buying, but has since fallen sharply. Prices are still up more than 50% year-to-date, even after the decline. Many of the fundamentals that fueled the rally, including central bank demand and safe-haven assets, are expected to remain in place.
"Tax changes in the heaviest gold-consuming countries will hurt global sentiment," said Adrian Ash, research director at BullionVault. However, the rebound in the London market on Monday, after weakening during Asian trading hours, suggests bullish sentiment remains strong, he added.
Among jewelry stocks, Chow Tai Fook Jewellery Group Ltd. fell as much as 12% in Hong Kong, Chow Sang Sang Holdings International Ltd. fell more than 8%, and Laopu Gold Co. fell more than 9%. The tax changes "will likely lead the entire industry to raise prices to address cost pressures," Citigroup Inc. analysts, including Tiffany Feng, wrote in a note.
Spot gold was trading around $4,004.86 per ounce at 11:32 a.m. in London. Silver was also little changed, while platinum and palladium rose. (alg)
Source: Bloomberg
Gold prices weakened slightly on Thursday (February 12th), as more solid US employment data reduced market confidence in an imminent Federal Reserve interest rate cut. The strong employment data promp...
Gold prices strengthened on Wednesday, supported by a weaker US dollar and falling US bond yields after the latest economic data reinforced the narrative that the Federal Reserve is likely to continue...
Gold experienced a slight correction in the European session on Tuesday (February 10th), but remained above $5,000/oz as the market held its breath ahead of a series of US data that could alter intere...
Gold held above the psychological $5,000 level at the start of the week, supported by a combination of factors that are "right" for the precious metal : physical demand from China, expectations of low...
Gold prices are still struggling to turn an intraday rebound into a sustained rally. After briefly falling to $4,654 (a four day low) and rebounding, prices were again rejected near $4,900. In the Eur...
Oil prices stabilized on Thursday (February 12th), as the market reassigned a risk premium to US-Iran tensions despite US inventory data showing swelling domestic supplies. This movement confirms one thing: geopolitical headlines are still more...
Gold prices weakened slightly on Thursday (February 12th), as more solid US employment data reduced market confidence in an imminent Federal Reserve interest rate cut. The strong employment data prompted market participants to shift expectations of...
The Hang Seng Index reversed its downward trend in Hong Kong on Thursday (February 12th), weakening by around 0.9% to around 27,000 after a strong session earlier. This decline halted the momentum of the short term rally, as investors began to...