Concerns about a second wave of COVID-19 makes Asian markets drop and gold jump
The global economic market seemed to be recovering as the pandemic appeared to be slowly receding. However, after fears that a second wave of the COVID-19 pandemic might be upon the world, the economic health of the world and especially the Asian market has started to plummet again which has caused the gold price to hit new heights. A lot of uncertainty is being foretold with regards to this second wave of the pandemic and currencies from around the world have already taken a hit. The price of gold has stayed well above the $1,700 mark per ounce finishing on a week-high of $1,719.11.
A look at the numbers
A top WHO official has expressed fears that the virus may never go away. Other top economic officials from around the world including Federal Reserve Chair Jerome Powell have warned of volatile times ahead. Jerome Powell had the following to say about the current situation
“A second pandemic wave is unfortunately not a tail risk, so the full extent of the economic damage may be underestimated”
As a result, stock prices have dropped around the world. US stock futures fell 0.2% while those in countries like Australia, Hong Kong, Korea and China all fell by about 1%. All of this comes in the wake of fresh outbreaks of the virus in countries like South Korea and China where the situation seemed to be under control previously. This has instilled uncertainty over whether the same might happen to the rest of the world.
Investors brace for a slow start:
Even if a second wave of the pandemic does not happen, investors are showing reluctance in taking the risk of investing in an economy that is still reeling from the effects of the global situation. A lot of this fear is originating from the fact that many health advisors have warned of renewed outbreaks if the lockdowns are lifted too soon. If that does happen, it will send the global economy into further disarray.
As these events are unprecedented and the full impact of a possible second outbreak cannot be estimated and that makes choosing the right investment options quite difficult and risky.
Tony Huntley, chief investment officer at Melbourne-based fund manager Adansonia Capital summed the current market situation
“We don’t think the market is going to retest the lows, but it’s probably seen its best also, so I’m expecting a correction. The issue is whether we get a second wave (of infections) … that would be my greatest fear”
A high degree of volatility is being predicted in the face of all this and that has resulted in a steady climb in gold’s price as it is seen as one of the safest hedges in these uncertain times.