Gold prices have dropped below $4,000 following China's decision to end tax rebates, which has reduced demand in the major market. The policy change has resulted in increased costs for retailers and diminished support for gold prices. Despite the price decline, traders are maintaining a calm approach to the market developments.

This recent development comes amid a period of consolidation for gold prices, which have been closely tied to a complex interplay of global economic factors and geopolitical events.

Market Performance

Last week witnessed a significant decline in gold prices across both domestic and international markets:

The downward trend in gold prices can be attributed to several factors:

1. Hawkish Federal Reserve outlook
2. Positive developments in US-China trade talks
3. Strengthening of the US dollar index, which rose above 99.5
4. China's elimination of tax rebates, reducing demand in a major market

Key Focus Areas

Traders and investors are keeping a close watch on several important events and data releases in the coming week:

1. Manufacturing and services PMI data from major economic regions
2. China's trade and growth numbers
3. US private sector data, including:
   • ADP non-farm payroll
   • Consumer sentiment index
4. US Supreme Court's tariff hearing scheduled for November 5

Analyst Projections

Market analysts anticipate continued weakness in gold prices. Some projections suggest that MCX gold could potentially decline to ₹118,000 per 10 grams.

Silver Market Update

In contrast to gold, silver futures on MCX showed positive movement:

• Price change: +₹817 (+0.55%)
• Current price: ₹148,287 per kilogram

This increase marks the end of a two-week losing streak for silver.

Central Bank Gold Purchases

An interesting trend has emerged in the official sector:

• Q3 central bank gold purchases: +28% (year-on-year)
• Full-year official buying expectations: 750-900 tonnes

This surge in central bank gold acquisitions is largely attributed to nations diversifying their reserves away from the US dollar.

As the week unfolds, market participants will closely monitor these key indicators and events, which may influence gold prices in the short to medium term. The interplay between economic data, policy decisions, and geopolitical developments will continue to shape the trajectory of the precious metals market.

China, a major player in the global gold market, has made a significant policy change that could impact gold retailers and potentially influence the precious metal's market dynamics.

Key Policy Change

China has decided to end a tax break that was previously available to gold retailers. This move marks a shift in the country's approach to the gold retail sector, which has enjoyed certain fiscal benefits until now.

Potential Implications for Retailers and Market

The removal of this tax advantage may have several implications:

1. Increased Costs: Gold retailers in China might face higher operational costs due to the loss of this tax benefit.

2. Pricing Pressures: There's a possibility that retailers could pass on some of these increased costs to consumers, potentially affecting gold prices at the retail level in China.

3. Market Competitiveness: The policy change might impact the competitiveness of Chinese gold retailers, both domestically and in the global market.

4. Supply and Demand Dynamics: Depending on how retailers and consumers respond, this could influence gold supply and demand patterns within China, the world's largest gold consumer.

Global Market Considerations

While the immediate impact is on Chinese retailers, the global nature of the gold market means that significant changes in China could have broader implications:

• International Gold Prices: Any substantial shift in Chinese gold demand might potentially influence international gold prices.
• Global Gold Trade: Changes in China's gold retail landscape could affect global gold trade patterns.

Monitoring the Situation

As this policy change unfolds, market participants worldwide will likely be watching closely to assess its potential impact on both the Chinese and global gold markets. The extent of these effects will become clearer as retailers adjust to the new tax environment and market dynamics respond accordingly.

It's important to note that the full ramifications of this policy change may take time to manifest and will depend on various factors, including how retailers adapt their strategies and how consumers respond to any potential price adjustments.