XAU/USD Outlook Bearish For Q3 on Financial Risks, Covid-19 Pandemic from buzai232's blog

Anti-fiat hedges like gold may surrender in the third quarter if a second wave of the coronavirus hits the global economy and dampens future inflation prospects. Demand for haven-linked assets like the US Dollar may amplify XAU/USDs losses as traders re-allocate capital from relatively illiquid commodities to more frequently-traded currencies like the Greenback.To get more news about WikiFX, you can visit wikifx news official website.
Rising unemployment numbers and uncertainty embedded in labor statistics could also magnify the appeal of holding haven-linked assets. The prospect of another lockdown in numerous localities around the United States could further dampen price growth and erode the appeal of gold. Fed Chairman Jerome Powell warned that the road to recovery will be arduous and “long”.

　　Furthermore, financial fragility in the corporate debt sector could also hurt gold prices if the market for leveraged loans and other credit derivatives undermine interbank stability. The dramatic widening of spreads on credit default swaps (CDS) for sub-investment grade corporate debt during the global selloff in equity markets in March saw gold prices crater with risk-oriented assets.
　　An erosion of the fundamental circumstances – like reinstates or extended lockdown measures – could destabilize highly-leveraged companies and increase the likelihood of widespread default if their already-thin revenue streams are dried up. In this environment, gold prices could suffer while a premium may be put on the anti-risk US Dollar.