Core Insights - The Shenzhen Shui Bei market, a major hub for gold and jewelry trading in China, is undergoing significant changes due to rising gold prices and new tax policies [1] - The Ministry of Finance and the State Administration of Taxation announced a new tax policy that differentiates between "investment" and "non-investment" uses of gold, leading to increased procurement costs for gold merchants [1][4] - The market is currently in an "adaptation period," with various stakeholders adjusting their pricing and strategies in response to the new tax regulations [1][3] Market Reactions - Initial confusion in pricing was observed following the announcement of the tax policy, with some merchants raising prices significantly without clear guidelines [2] - By November 6, the market had established a new pricing logic, with Shui Bei gold prices reported at 976 yuan per gram, reflecting an increase of nearly 7% from the domestic gold price [4] - Major brands like Chow Tai Fook and Lao Feng Xiang quickly adjusted their prices in response to the new tax policy, indicating a widespread impact across the retail sector [4] Consumer Behavior - The increase in gold prices has led to a decline in consumer foot traffic, with some customers opting for cash gifts instead of gold for weddings, reflecting a shift in purchasing behavior [3] - Merchants are experiencing varied responses, with some feeling anxious about the market changes while others remain relatively calm [3] Supply Chain Adjustments - Gold merchants are adopting a "settlement by material" approach to mitigate the impact of the new tax policy, allowing transactions to occur without direct price adjustments related to the tax [7] - Upstream gold material suppliers are facing challenges in pricing due to uncertainty about the new tax implications, leading many to halt sales temporarily [8] - The production and wholesale sectors are experiencing a delayed reaction to the new policy, as they typically lock in prices based on contract dates, but they remain vulnerable to downstream demand fluctuations [8][9] Future Outlook - Gold producers are closely monitoring changes in customer purchasing strategies and adjusting their offerings accordingly, indicating a proactive approach to market dynamics [9] - The overall adjustment in the gold market is seen as a short-term response to the tax reform, with the potential for further optimization as stakeholders clarify cost-sharing and policy details [9]