We all fear the 2nd wave, but the U.S. hasn’t even managed the first one! That’s bad news for Americans, but what does it suggest for gold?
We all fear the second wave of infections. Bad news for Americans, but excellent news for gold.
Please take a look at the chart below. As you can see, the epidemiological scenario in the United States does not look well The number of new day-to-day confirmed Covid-19 cases has actually been increasing again because mid-June, which implies that coronavirus is far from being contained. Actually, the variety of new cases has actually practically reached a brand-new record level!
Regretfully, the number of daily deaths has actually likewise increased recently, as the chart below shows.
Who could suppose that hasty reopening of economies without appropriate testing and contact tracing, and mass riots could cause the 2nd wave of infections?
I mentioned today the second wage of infections. However actually America does not deal with the 2nd wave. The U.S. could not even deal with the very first wave! And, oh, simply as a pointer, we are talking about the wealthiest country worldwide!
The charts above present nationwide data. Scenario in specific states is actually much worse. The variety of new cases and hospitalizations are rapidly accelerating in a number of states, which is going to be bothersome for the economy and the marketplaces. Texas stopped its reopening because of the renewal of Covid-19 infections and hospitalizations.
Meanwhile, in New York, Guv Andrew Cuomo introduced quarantine for everyone coming from 8 states struggling with the most extreme resurgence of the coronavirus– Alabama, Arizona, Arkansas, Florida, North Carolina, South Carolina, Texas and Utah– and delayed the reopening of shopping malls, fitness centers, and movie theaters.
Additionally, some companies either has closed their shops (like Apple in Houston) or delayed the reopening of their premises (like Disney and its amusement park in California). Such actions hit, obviously, the economy. For instance, the U.S. economic recovery tracker established by Oxford Economics revealed a small wear and tear in the week ending June 12 after 10 weeks of improvement. after a strong preliminary stage of healing, we could go into a duration of slower phase, or even a turnaround, if the current renewal of Covid-19 infections speeds up and gets out of control.
Ramifications for Gold
What does it all indicate for the gold market? Gold might benefit then at the expense of risky assets. Another down risk for the gold market is the strengthening U.S. dollar when turmoil hits.
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Arkadiusz Sieron, PhD
Sunshine Profits: Analysis. Care. Revenues.
Disclaimer: Please note that the goal of the above analysis is to go over the likely long-term effect of the featured phenomenon on the rate of gold and this analysis does not suggest (nor does it aim to do so) whether gold is most likely to move higher or lower in the short- or medium term. In order to identify the latter, lots of extra aspects require to be considered (i.e. belief, chart patterns, cycles, signs, ratios, self-similar patterns and more) and we are taking them into account (and talking about the short- and medium-term outlook) in our Gold & Silver Trading Alerts
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