CNN Business/Julia Horowitz
Europe’s biggest economy is heading into lockdown. Will recession follow?

Germany, the fourth largest economy in the world, is heading into a national lockdown that could send it into another recession — a major warning as countries like the United States try to battle a spike in coronavirus cases over the winter.

What’s happening: Chancellor Angela Merkel said Sunday that Germany will go into a “hard” lockdown starting this week and continuing through the Christmas period. Non-essential shops and schools will be shut starting on Wednesday, and Christmas gatherings will be reduced from 10 people to only five from two different households.

The announcement comes after Germany recorded nearly 30,000 new coronavirus infections and almost 600 deaths within 24 hours on Friday, surpassing records.

Economy Minister Peter Altmaier said in an interview Monday that he thinks the country can avert another recession thanks to government support measures. Reuters reports that the number of people that will work reduced hours and have wages subsidized by the state is expected to rise.

“It is possible, if we act wisely, to once again preserve the economic substance of the country,” Altmaier said. But he stressed that this “depends very decisively on the further course of events.”

Given the extent of new restrictions, economists are worried.

“Germany must brace itself for a second recession,” Dr. Jörg Krämer, Commerzbank’s chief economist, told clients Monday.

Big picture: Germany isn’t the only country grappling with a spiraling health situation. South Korea has also sounded the alarm about rising cases and could announce new social distancing measures. And London’s mayor is asking the government to close schools for the holidays earlier than planned given a surge in infections in the city.

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Bloomberg/Ranjeetha Pakiam
Gold Climbs as Stimulus, Fed and Fresh Lockdowns Support Advance

Gold advanced as investors weighed the prospects for a U.S. spending package and possibility of further action from the Federal Reserve at its last meeting of the year, against the progress on the roll-out of vaccines.

A bipartisan group of lawmakers delivered details of a $908 billion relief package, splitting it into two parts in recognition of deep differences over state aid and a liability shield for employers. With Joe Biden now confirmed as president by the Electoral College, leaders in Congress need to find a way to get one or both parts through the House and Senate before the last of the relief provisions from earlier stimulus expire at the end of the year.

Bullion’s path in recent weeks has been dominated by developments on vaccines and prolonged stimulus talks in the U.S., with prices set for the first quarterly loss since 2018. Still, the metal may get some support after the Fed meets Tuesday and Wednesday, with markets expecting fresh guidance on asset purchases. In addition, the haven may get a boost from fresh anti-virus curbs being rolled out in major economies including Germany and the U.K.

“Prices are looking vulnerable again but should once again be saved by the Fed,” said Edward Moya, senior market analyst at Oanda Corp. “Economic scarring will undoubtedly make it easier for the Fed to continue to provide more accommodation and that could make many traders want to jump back in.”

Spot gold rose as much as 0.4% to $1,835.17 an ounce and was at $1,832.75 at 11:39 a.m. in Singapore, after a 0.7% drop on Monday. The precious metal remains about 20% higher this year after hitting a record in August. Silver climbed 0.8%, platinum added 0.1% and palladium advanced 0.3%. The Bloomberg Dollar Spot Index was flat after losing 0.2% Monday.

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CNBC/Fred Imbert and Maggie Fitzgerald
Dow closes more than 150 points lower amid increasing fears of new lockdown measures

The Dow Jones Industrial Average and S&P 500 fell on Monday as fears of additional Covid-19 restrictions offset the optimism around a vaccine rollout.

The 30-stock Dow closed lower by 184.82 points, or 0.6%, at 29,861.55. At its session high, the Dow was up more than 200 points and hit an all-time high. The S&P 500 declined by 0.4% to 3,647.49, posting its first four-day losing streak since Sept. 21. The Nasdaq Composite outperformed, rising 0.5% to 12,440.04.

New York City Mayor Bill De Blasio warned earlier in the day that the city could experience a “full shutdown” soon. His comments put pressure on the Dow and S&P 500.

“We’re seeing the kind of level of infection with the coronavirus we haven’t seen since May and we have got to stop that momentum, or else our hospital system will be threatened,” de Blasio said.

Other parts of the U.S., as well as other countries, have already implemented stricter social distancing measures. In the U.K., the country’s health secretary said London will be placed on England’s toughest tier of Covid-19 restrictions.

“These are lockdowns that are hurting global growth,” said Quincy Krosby, chief market strategist at Prudential Financial. “The question now is how many more states [and countries] introduce lockdowns.”

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