Collapsed U.S. GDP Was Followed by a Slump in Gold Prices, Stock Indexes & Oil Prices

WikiFX News (31 July)- On July 30 (local time), the U.S. Commerce Department reported that U.S. GDP shrank by 32.9% in the second quarter, according to the advance estimates. This is the largest collapse since 1940s, dramatically dragging down all the oil prices, stock indexes and gold prices.

The sharp drop in U.S. Q2 economy was largely driven by the rapid decline in consumer spending. Among the whole economy, private consumption accounted for 65-70%. As consumers are much more conscious of saving money in times of the pandemic, the provided unemployment benefits and paper checks cannot bring consumption back from the downtrend.

Above information triggered the overall loss in the three U.S. stock indices. In terms of futures, oil jumped more than 3% while WTI and Brent Crude both closed lower. At the same time, gold prices eased back to $1945.40 per ounce, down 0.4%.

WikiFX reminds investors of possible exposure to credit risks, and suggests that traders should be defensive.

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