Storyline: Gold prices have hit a record high in the domestic market following the implementation of China's new value-added tax (VAT) policy on the gold market, effective on Nov 1. The most significant change under the new policy is that gold for investment and non-investment purposes will be subject to different tax rules once it leaves the exchange and enters the distribution chain. Gold jewelry, classified as "non-investment use," faces an increased tax burden, which impacts the gold jewelry market. Gold processing workshops are found everywhere across Shanghai's streets. Zhou Baolin, who has been operating one workshop in Yuyuan Garden, one of the most famous attractions in the city, has opened a new branch in Anding Town, Jiading District, northwest Shanghai, capitalizing on the booming gold business by integrating trading and exchange services. Currently, the store's gold prices have barely changed, still based on the market price plus a premium of 10 to 20 yuan (about 1.39 to 2.78 U.S. dollars). Zhou said he and his peers are awaiting updated notifications from upstream suppliers in the Shuibei Market, the country's largest gold jewelry manufacturing and trading hub in Shenzhen, south China's Guangdong Province. "Currently, we mainly use our existing inventory or recycled old gold jewelry to exchange for new products, so price changes remain relatively slight," said Zhou. Meanwhile, major gold stores have completed price adjustments under the new tax rules. On Tuesday, domestic gold reached a high of 950 yuan (about 132 U.S. dollars) per gram, falling short of the prior peak of 999 yuan (about 139 U.S. dollars) peak, while London spot gold price hovered around 4,100 U.S. dollars per ounce, also below its previous high. Nevertheless, domestic gold jewelry prices have surpassed 1,300 yuan (about 181 U.S. dollars) per gram, setting a new record. The reason stems from tax-inclusive pricing. For instance, major Chinese jewelry brand Lao Feng Xiang, as a gold exchange member, previously could fully deduct the 13 percent sales VAT when converting gold into jewelry after warehouse withdrawal. Now, only partial deductions are permitted, with the shortfall factored into gold prices. "The new policy may increase merchants' procurement costs by approximately 7 percent, translating to a price rise of about 70 yuan (about 9.72 U.S. dollars) per gram," said Liu Shiyao, precious metals researcher at Zijin Tianfeng Futures Research Institute. The industry generally believes that high gold prices combined with tax impacts will negatively affect gold sales. Against this backdrop, gold processing and exchange services are expected to grow. "Currently, we're seeing more gold exchange transactions. Customers can trade in old jewelry for new designs by simply paying the processing fee," said Zhou. Shotlist: Shanghai, China - Recent: 1. Gold store, advertisement 2. Various of goldsmith melting gold 3. SOUNDBITE (Chinese) Zhou Baolin, gold workshop owner (ending with shot 4): "Currently, we mainly use our existing inventory or recycled old gold jewelry to exchange for new products, so price changes remain relatively slight." 4. Goldsmith shaping gold 5. Gold store 6. Various of phone screens showing stock data, gold prices 7. Gold bracelets on display 8. Consumer paying by card 9. Gold necklace on display 10. Salesclerk showing price on calculator 11. SOUNDBITE (Chinese) Liu Shiyao, precious metals researcher, Zijin Tianfeng Futures Research Institute (starting with shots 9-10): "The new policy may increase merchants' procurement costs by approximately 7 percent, translating to a price rise of about 70 yuan (about 9.72 U.S. dollars) per gram." 12. Various of goldsmiths processing, shaping gold accessories 13. SOUNDBITE (Chinese) Zhou Baolin, gold workshop owner (starting with shot 12): "Currently, we're seeing more gold exchange transactions. Customers can trade in old jewelry for new designs by simply paying the processing fee." 14. Various of old jewelry on display, calculator 15. Gold store advertisement [Restrictions: No access Chinese mainland]