Gold is the lifestyle choice of people for a stable and confident economy.
In the changing environment, there is a lack of consensus on what the future financial needs of the people are, which is affecting the economy. This is due to the high investment pressure on safe haven gold.
Increasingly modern technologies are reducing job opportunities. Consumers' fear of job loss and future planning, They are hoarding their wealth under safe investments like gold and real estate.
Big investors are promoting cryptocurrency trading platforms as an alternative to the stock market for their financial gambling.
China, for its part, is trying to put long-term pressure on gold in an attempt to control its changing economic growth and superpower competition, which will affect domestic consumers, temporarily. The rise in gold prices in the global economic crisis has led to people continuing to reduce their purchases of gold. China, as a domestic gold seller, has been restricting local gold sales by imposing a “value-added tax” (VAT) on gold dealers through the Shanghai Gold Exchange.
China reduced VAT from 16% to 13% in 2019. The VAT tax reduction has increased the number of people buying gold jewelry when they buy gold and sell it as jewelry (Refund facility). The reduction in VAT has increased the number of people buying gold jewelry. For sellers, the tax reduction on gold jewelry was seen as a business success. This has been followed by the rise in gold prices in the global market over the past five years. It has made gold jewelry dealers very profitable.
China government's VAT tax concession cancelled;
The global gold price has skyrocketed. Following this, China removed the 13% VAT concession on gold. This is seen as an indirect signal that gold will face a major decline in the future.
China is trying to reduce its citizens' investment in gold. VAT tax is set to increase from 13% to 16%. This will discourage gold sellers from buying gold in the short term. China's government cancels VAT-tax concessions against the US Fed interest rate cut to 3.75%-4.00%, China and the US are showing competition over gold. The cancellation of VAT-tax concessions is set to come into effect from November 1.
In the global gold market, the price of gold has fallen. This shows that China's power hand over gold is stronger than that of the United States.
