GOLDMAN SACHS: Commodities markets are facing their biggest demand shock since the financial crisis
Coronavirus' grip on Chinese manufacturing efforts is disturbing commodities markets at levels not seen since the 2008 financial crisis,The outbreak's infection rate in China has only recently started to slow after authorities instituted strict containment measures. After weeks of forced quarantines and factory shutdowns, the country's critical and complex manufacturing sector is restarting.
Currie also pointed to China's oil storage capacity as a variable under pressure. The country's stores are"filling up quickly, presenting further downside risk if storage is ultimately breached," the commodities chief said. The issue is unique to oil and other liquid commodities, as inventory of solid goods can be more easily accommodated.
"As a result, gold has outperformed other safe-haven assets like the Japanese Yen or Swiss Franc, a trend we see continuing as long as uncertainty around the full impact of COVID-19 remains," the commodities head wrote.
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