Most evident is the renewed concern of investors about the worsening of Covid-19 contamination rates in China, which has led to a lockdown in major Chinese cities that now include parts of Beijing. More than 500,000 Covid-19 cases have been reported in Shanghai as hazmat patrols continue to impose lockdowns across the city.

Shanghai is a major port and its closure has led to a lack of overseas shipping, disrupting the supply chain of electronics and semiconductors in the United States vital to the automotive and electronics industries.

Real concerns about a global economic downturn stemming from China’s lockdowns have shaken global stock markets. The shutdown was the main reason for the dramatic sales in Chinese stock markets, which had a huge impact on US stocks today, as all major indices fell sharply. The Dow fell 809 points or 2.38%, the S&P 500 fell 2.81% and the technologically heavy NASDAQ fell sharply, losing 3.95% or 514 points.

Rising Covid-19 infections in China and subsequent lockdowns have raised concerns that inflation will continue to rise and has not peaked, according to the Federal Reserve. When added to the current geopolitical uncertainty about the war in Ukraine, these issues are at the heart of the current bullish gold market climate as a safe haven and hedge against both inflation fears and the emergence of an off-market climate. The downturn in the gold market is the strength of the dollar, along with the possibility for the Federal Reserve to launch a series of rapid interest rate hikes in each of the next two FOMC meetings.

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