Group 1 - Gold prices held around $4,000 an ounce after a weak start, influenced by China's decision to end a long-standing tax rebate for some retailers, which may impact demand in the precious metals market [1][2] - The new policy allows companies producing non-investment gold to offset only 6% of the VAT, down from 13%, affecting both jewelry and industrial applications [3] - Jewelry stocks in China experienced significant declines, with Chow Tai Fook Jewellery Group Ltd. falling by as much as 12%, and Chow Sang Sang Holdings International Ltd. and Laopu Gold Co. also seeing drops of over 8% and 9% respectively [6] Group 2 - Despite a record surge in gold prices in October, prices have since dropped sharply, yet remain over 50% higher year-to-date, with ongoing demand from central banks and safe-haven investors expected to support prices [4] - Analysts predict that the tax changes will lead to price increases across the entire jewelry industry to manage cost pressures [6] - The overall sentiment in global gold markets may be negatively affected by the tax changes in China, the largest consumer of gold [5]

Core Insights - Gold prices dipped below $4,000 an ounce following China's decision to end a long-standing tax rebate for certain retailers, which may negatively impact demand in a major precious metals market [1][2] - The immediate delivery price of gold fell by as much as 1 percent before recovering most of the loss, coinciding with a significant drop in Chinese jewelry stocks [2][4] - Despite a record high in October driven by retail buying, gold prices have seen a sharp decline in the last two weeks of the month, although they remain over 50 percent higher year-to-date [3] Industry Impact - The tax changes in China, the largest consumer of gold, are expected to dampen global sentiment towards gold, according to industry experts [4] - Major jewelry companies in Hong Kong experienced significant stock declines, with Chow Tai Fook Jewelry Group Ltd falling by 12 percent, Chow Sang Sang Holdings International Ltd dropping over 8 percent, and Laopu Gold Co decreasing by more than 9 percent [4] - Analysts predict that the entire gold industry may raise prices to offset the cost pressures resulting from the new tax policy [4] Tax Policy Changes - The new tax policy, effective until the end of 2027, restricts the value-added tax deduction to members of the Shanghai Gold Exchange and Shanghai Futures Exchange for gold sold as investment products [5] - Non-members and exchange members producing non-investment gold, such as jewelry, can now only offset 6 percent of the input value-added tax when selling to consumers, down from 13 percent [6]