Gold trades as a single global commodity, yet the price a buyer pays differs from country to country. Import duties and domestic taxes are a large part of the reason.
A duty inserts a wedge into a world price
Gold arrives in most consuming countries by import, since few of them mine or refine enough domestically to satisfy the demand of their own jewellers, investors and banks.
A duty applied at the border adds directly to the landed cost of every ounce brought in, and that cost is passed along to the buyer because an importer working on a thin margin cannot absorb it for long.
The domestic price therefore settles above the international benchmark by roughly the size of the duty, and it stays there for as long as the duty remains in force.
Local premiums and discounts follow demand
Around that duty adjusted level, local prices move above or below the international benchmark according to how strong buying is at the time.
A premium indicates that domestic demand exceeds what importers are bringing in, and it draws additional metal towards that market.
A discount indicates the opposite, often because local selling of existing holdings is meeting demand without new imports arriving.
Duties encourage unofficial routes
Where the gap between the duty inclusive price and the world price is wide, moving metal outside official channels becomes profitable.
Gold is compact, valuable and hard to distinguish once refined, which makes it well suited to informal movement compared with most goods.
Authorities respond with enforcement and with duty adjustments, and the volume moving unofficially tends to expand and contract with the size of the incentive.
Taxes change the form demand takes
Where investment bars and jewellery are taxed differently, buyers shift towards whichever category is treated more favourably.
Higher rates on fabricated products push demand towards plain bars and coins, while favourable treatment of jewellery supports demand for higher purity ornamental pieces used as savings.
The total appetite for metal changes less than the form it arrives in, which is why demand statistics can shift sharply after a tax change without underlying interest moving much.
Policy changes ripple through the trade
Refiners, importers and retailers hold inventory, and a change in duty revalues that inventory overnight.
Anticipation of a change can therefore pull imports forward or delay them, producing distorted trade figures around the announcement.
The underlying demand is usually steadier than those figures suggest, and it reasserts itself once the inventory adjustment has worked through.