China ($CSI300) abruptly ended its gold import tax break on October 31, triggering a 12% surge in local gold prices and rattling the bullion market. The China ends gold tax break news stuns traders, with investors bracing for a $7 billion annual impact and rising market volatility.
Gold Prices Jump 12% as China Ends $7 Billion Import Tax Break
China, the world’s largest gold consumer, officially announced the cessation of its five-year gold import tax waiver on October 31, 2025. Spot gold on the Shanghai Gold Exchange soared by 12% overnight to CN¥494 per gram ($2,120/oz), up from CN¥441 per gram the previous day (Bloomberg, Oct. 31, 2025). Imports are expected to contract by 180 tons annually, according to Shanghai Gold Exchange data, as the reinstated tax raises import costs by as much as 5%. The China Gold Association estimated this tax break previously supported $7 billion in annual bullion inflows.
Why Global Bullion Markets Brace for Volatility After China Policy Shift
The end of China’s gold tax break reshapes global bullion flows at a time when physical tightness had already driven prices to $2,000/oz in October, according to World Gold Council data. China’s demand accounted for nearly 25% of global bar and coin sales YTD 2025. By raising barriers to imports, the policy could push international traders to redirect shipments to India and Southeast Asia, amplifying price differentials between the Shanghai Gold Exchange and London Metal Exchange. Furthermore, the yuan’s recent 2% depreciation intensifies price divergence and trading volatility for gold-related stocks within the stock market analysis space.
How Investors Should Adjust Portfolios Amid China’s Gold Tax Change
Investors exposed to gold miners such as Zijin Mining ($601899.SS) and China National Gold Group face heightened earnings risk as local sourcing becomes costlier. ETF flows, such as those tracking the S&P Gold Index, may see increased volatility as arbitrage opportunities shift. Currency traders should monitor the impact on the yuan and related forex moves. For global asset allocators, the gold sector’s reweighting could strengthen regional ETFs outside of China, while bullion-linked equities may see rising spreads. Examine latest financial news for regulatory adjustments as market participants recalibrate positions by year-end.
What Analysts Expect Next for Gold After China Cuts Tax Incentive
Market consensus suggests China’s policy reversal may dampen its demand growth in 2026, but physical gold tightness worldwide is unlikely to abate quickly. Investment strategists note potential for wider Shanghai-London price gaps and increased arbitrage. According to analysts at UBS, the long-term trajectory for gold will depend on China’s macro policy stance and inflation expectations, with ongoing geopolitical risks supporting bullion as a core portfolio hedge.
China Ends Gold Tax Break: Signals New Era for Bullion Investors
This China ends gold tax break development ushers in a new era of localized supply dynamics and heightened price volatility. Investors should monitor yuan movements, bullion spreads, and global policy signals to navigate the shifting gold landscape. Watch for regulatory updates and sector reallocation opportunities as China’s actions reshape the bullion market’s strategic outlook for 2025 and beyond.
Tags: China, gold, bullion market, $CSI300, gold tax break
