Coronavirus death toll in the US estimated to reach 200K
Russia stops buying gold for reserves
US dollar continues to shine
Stocks Down over 3%
Global equity markets continued to trend lower during the Asian and the European sessions after the latest press conference from President Trump. After a grim-sounding announcement that the victims of the coronavirus in the US could reach 200,000 people, markets started to sell off.
US futures are down close to 3.5% into the market open, and the German DAX is down 3%. Japanese stock indices led the way, with the selling pressure continuing into the European morning.
The extent of the global recession appears to have been underestimated by financial markets and a new repricing of risks appears to be underway.
Russia stops accumulating gold reserves
Precious metals are back under pressure after a solid rebound into the European morning. Gold is in focus as its safe haven status could be jeopardized by a global USD shortage. Emerging market central banks with significant gold reserves include China, Russia, Saudi Arabia, India, and Turkey.
The disappearance of one major buyer of gold from the market could affect global gold demand during the month of April and lead to a material decline in the value of the precious metal. The main issue in the coming months is likely to be the level of gold reserves held by central banks pressures by lower oil prices, like Russia, and Saudi Arabia.
USD Marching Higher
In the meantime, the USD continued marching higher, underpinned by incessant demand. It is trading higher against all major currencies, as well as commodity currencies like the AUD, CAD, and NZD.
The global US dollar shortage continues to hamper any prospects for a quick recovery in major emerging markets economies, which are heavily dependent on a consistent supply of dollars from their trade with the US.