Gold has dropped by $10 today after reaching a record high yesterday. A recent Reuters report indicates that China’s gold and copper imports have declined, potentially due to an impending tax policy change. The report, citing four sources, sheds light on the key factors contributing to the decline.
China’s Decline in Gold Ore Imports
In September, gold ore and concentrate imports to China fell by 22.4% month-over-month, amounting to 201,004.9 metric tons. This decline is being attributed to a proposal by Chinese customs officials to impose higher taxes on gold products containing more than 58% iron or sulfur. The proposal suggests taxing these products as pyrite, which carries a 1% import tax and a 13% VAT.
Chinese importers are actively opposing this tax change, but customs authorities remain firm. As a result, some traders are already diverting shipments to other destinations to avoid the potential risk of retroactive taxes.
Impact on the Gold Market
While this situation isn’t expected to have a major negative impact on the broader gold market, it may affect refining and processing operations. However, if local shortages in physical gold emerge, a domestic premium could develop, potentially reducing buying activity until supply chain disruptions are resolved.
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