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GOLD FALLS ON CHINA ENDING TAX INCENTIVE FOR GOLD PURCHASES

ADMIN || 3rd November 2025

Gold has fallen in the early Asian session today on reports of China's Finance Ministry ending a tax incentive for sales of the precious metal, effective Nov. 1. Retail investors are no longer allowed to offset value-added tax when selling Gold they bought from the Shanghai Gold Exchange and Shanghai Futures Exchange, whether sold directly or after processing. The regulatory move could have wide repercussions as China is one of the world's biggest gold consumers. Spot gold is 1% lower today at $3,965/oz.

Most fabricators in China had been deducting value-added tax on inputs when selling downstream to consumers. Under the new policy which will stay in place until the end of 2027 the tax incentive is reserved for members of SGE and Shanghai Futures Exchange. They include major banks, refineries and fabricators who can directly participate in trading.

This implies some amount of deeper correction in Gold prices for the time being. We expect a correction towards 3800 levels in short term which also happens to be the 50 DMA.

Gold’s 60-day historical volatility has climbed to 21.2%, well above its one-year average of 17.5%. Such levels imply the haven trade has turned speculative, with volatility levels more reminiscent of risk assets than a store of value. Compare that to Bitcoin, where volatility sits near 36%, close to the lower end of this year’s range. In other words, gold has been growing more turbulent while Bitcoin seems to be stabilizing.

Gold is still up about 50% this year, and central-bank buying is unlikely to fade any time soon. But the volatility uptick suggests the market is stretched and a sustained rally may take time to get going.

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