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PRECIOUS-Gold gains as global markets slide on coronavirus fears

Published 09/03/2020, 11:11 pm
© Reuters.  PRECIOUS-Gold gains as global markets slide on coronavirus fears
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* Global equities and U.S. Treasury yields slide

* Autocatalyst metal palladium down 5%

* Silver and platinum lose more than 3%

* Investors await ECB meeting on Thursday

By Asha Sistla

March 9 (Reuters) - Gold prices rose on Monday, having briefly breached the $1,700 level, as a rout in global equities on concern over the economic fallout from the coronavirus epidemic lifted demand for safe-haven assets.

Autocatalyst metal palladium, meanwhile, slid as much as 8% in early trade amid the wider risk-off sentiment.

Spot gold XAU= rose 0.4% to $1,680.07 an ounce by 1136 GMT, having touched its highest since December 2012 at $1,702.56. U.S. gold futures GCv1 rose 0.5% to $1,680.20.

Gold had been up as much as 1.7% in a volatile session.

"We've this two-way battle going on between leveraged hedge funds, who need to reduce again, and investors trying to find some safe haven away from falling stock markets, especially the energy sector," said Saxo Bank analyst Ole Hansen.

European equities slumped by 7% and U.S. stock futures hit the loss limit as investors sought refuge in safe havens. MKTS/GLOB .N .EU

Oil prices dived by more than a quarter after Saudi Arabia cut its official prices, putting crude on track for its biggest daily slump since the first Gulf War. Gold is often viewed as a hedge against oil-led inflation. O/R

"It's red across the board - all energy is down, all grains are down, all soft commodities are down, all metals are down, with gold being the one exception," Hansen said.

The dollar fell against the Japanese yen, while U.S. 10-year Treasury yields US10YT=RR hit record lows. USD/ US/

Italy on Sunday stepped up measures to contain the coronavirus outbreak, ordering a virtual lockdown across much of its wealthy north on Sunday. In little more than two weeks, the number of recorded coronavirus cases in Italy has surged to 7,375, with 366 deaths, as the number of cases worldwide has climbed above 110,000, with 3,800 deaths. focus next turns to the European Central Bank meeting due on Thursday.

"We think that the ECB will follow the lead of the U.S. Federal Reserve and will likewise loosen its monetary policy, which should lend further buoyancy to the gold price," Commerzbank (DE:CBKG) analysts said in a note.

Palladium fell 5.5% to $2,424.04 an ounce, having earlier dipped to its lowest since Feb. 12 at $2,352.

"Given the theme of risk reduction and deleveraging at the forefront, palladium is being caught up in that ... limited liquidity has created problems and that's why it's being pushed to this extent," Hansen said.

Palladium had gained about 54% in 2019 on supply issues.

In other precious metals, silver XAG= fell 2.2% to $16.94 an ounce while platinum XPT= was down 3.4% at $870.56.

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