Gold bars are taxed, and a battle to defend foreign exchange reserves begins. Another country takes action. What impact will it have on the international gold price?

Following India, Malaysia has raised the import tariff on gold to stabilize the exchange rate and preserve foreign exchange reserves.

According to Bloomberg, citing traders on the 26th, Malaysia has quietly imposed a 10% tariff on the import of some gold bars since at least early May.

Malaysia has long imposed a zero - tariff policy on gold imports. This sudden policy adjustment has also impacted the local gold trade.

According to Bloomberg, affected by this, some goods have been detained by customs, and some shippers have transferred their goods to other regions. Since the local gold price has not risen synchronously, the additional tax burden has led to losses in such import businesses.

Muamalat Bank in Malaysia is a local bank that offers gold investment products. The bank issued a statement this week saying that once a 10% import tax is imposed on gold bars, the relevant costs will be passed on to consumers.

According to data from the Malaysian Statistics Department, in the first four months of this year, Malaysia's non - monetary gold imports were about 9.7 billion ringgit (equivalent to about 16.636 billion yuan).

Malaysia's move is almost identical to India's.

According to India's Economic Times, on May 13, the Indian government significantly raised the import tariff on gold and silver from 6% to 15%, and the import tariff on platinum from 6.4% to 15.4%. This move is to address the current pressure on the country's foreign exchange reserves and external debt accounts.

The report pointed out that raising the import tariff may reduce domestic demand in India, which is the world's second - largest consumer of precious metals. This move may help narrow the trade deficit and support the rupee, which has been one of the worst - performing currencies in Asia.

Some officials have warned that if the import tariff is significantly raised, gold smuggling may make a comeback. Such smuggling activities have significantly decreased after India lowered the tariff in 2024.

Li Gang, the research director of the China Foreign Exchange Investment Research Institute, told China News Service that India is the core pricing force for international physical gold demand. Indian people have a deep - rooted culture of gold savings, and gold is widely used in weddings, religious ceremonies, and wealth inheritance. The country has a large - scale gold import volume all year round, and its physical gold demand can affect the Asian gold premium and discount, the international gold flow, and the seasonal gold market.

Li Gang pointed out that the scale of Malaysia's gold market is far smaller than that of India. However, in recent years, its position in the Southeast Asian gold trade has been continuously improving. In the Asian gold circulation system of Singapore, Malaysia, and Dubai, Malaysia undertakes the functions of regional transfer, investment expansion, and gold refining and processing. Therefore, although Malaysia's tax - collection this time has less influence than India's, it will have a certain impact on the efficiency of the Southeast Asian gold trade and the regional investment sentiment.

In the view of industry insiders, the successive imposition of gold import tariffs by the two countries is an emergency measure in the battle to defend foreign exchange reserves.

Li Gang pointed out that in essence, the imposition of gold tariffs by India and Malaysia is a defensive management of foreign exchange reserves, capital flows, and currency stability by emerging market countries in the current global high - interest - rate and strong - dollar cycle.

Wind data shows that as of May 27, the US dollar against the Indian rupee was reported at 95.785, a cumulative depreciation of about 6.46% compared with 89.975 at the beginning of the year; the US dollar against the Malaysian ringgit was about 3.96, a cumulative appreciation of about 2.19% compared with about 4.03 at the beginning of the year.

"For non - gold - producing countries like India and Malaysia, where residents' demand for gold purchases has been strong for a long time, a large amount of gold imports will directly consume US dollar foreign exchange reserves and increase the pressure on the current account. Against the background of a strong US dollar and high global financing costs, the more gold is imported, the more obvious the pressure on the domestic currency exchange rate will be." Li Gang said.

Wang Hongying, the president of the China (Hong Kong) Financial Derivatives Investment Research Institute, said in an interview with China News Service that the most direct short - term motivation for the two countries to impose gold tariffs is to reduce gold imports to stabilize the trade deficit, and at the same time, to retain more US dollars in the country to prevent further depreciation of the domestic currency, thereby stabilizing the exchange - rate market trading situation.

"Restricting the inflow of gold into the country is not to be bearish on the gold price, nor to prevent residents from being trapped when buying at a high price. The fundamental reason is to restrict the outflow of US dollar foreign exchange reserves." Wang Hongying pointed out.

Li Gang believes that the continuous record - high international gold price in the past two years has also stimulated the "hedging - driven rush" among residents of emerging market countries. For the governments of emerging market countries, a large amount of residents' funds flowing from bank deposits, bonds, and even consumption to gold will weaken the liquidity of the domestic financial system and affect credit expansion and economic growth. Therefore, raising the import tariff can not only increase fiscal revenue but also suppress short - term speculative demand and slow down the speed of gold imports.

In Li Gang's view, many emerging market countries are trying to stabilize their domestic currency exchange rates. If residents over - buy gold, it is essentially equivalent to "private de - domestic - currency - ization", and the government does not want this trend to spread too quickly. This round of gold tariffs should be regarded more as a macro - capital management tool rather than a traditional trade protection policy.

According to a report in India's Economic Times on May 22, the latest report released by the World Gold Council predicts that affected by the significant increase in the import tariff, the combined demand for jewelry, gold bars, and gold coins in India in 2026 will decline by about 50 to 60 tons, a decrease of about 10% compared with the previous year.

Since the beginning of this year, the gold price has fluctuated sharply. On May 27, the spot gold price once fell below the $4,500 per ounce mark, a decline of nearly 20% compared with $5,598.75 per ounce at the beginning of the year.

In Li Gang's view, the adjustment of gold tariffs in India and Malaysia has a very limited overall impact on the international gold price. The current gold - pricing logic no longer lies in the gold purchases by Asian residents. The real driving factors are central bank gold purchases, the Federal Reserve's interest rates, US dollar credit risks, and geopolitical conflicts.

Looking forward to the future market, Wang Hongying pointed out that in the short term, gold is facing a technical adjustment, mainly because high inflation in the United States may cause the Federal Reserve to suspend interest - rate cuts or even raise interest rates, and some countries have limited foreign exchange reserves. A large amount of gold imports will consume US dollars and affect the exchange rate. In the long - term, as the US fiscal deficit continues, central banks around the world will still increase their gold holdings to hedge against US dollar credit risks.

Li Gang said that the gold tariff is a short - term regulation measure for emerging markets. If the official gold ratio continues to rise, the long - term de - dollarization logic still exists.

The views in this article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.

This article is from the WeChat official account "China News Service" (ID: jwview), author: Li Ziman, published by 36Kr with authorization.