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PRECIOUS-Gold gains on virus spread, rate cut hopes; palladium surges to record

Published 27/02/2020, 07:55 pm
© Reuters. PRECIOUS-Gold gains on virus spread, rate cut hopes; palladium surges to record
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(Adds graphics, updates prices)

* Platinum touches over 2-month low, silver near 1-week trough

* Palladium hits record high at $2,847.50/oz

* GRAPHIC-2020 asset returns: http://tmsnrt.rs/2jvdmXl

* Coronavirus interactive graphic: https://tmsnrt.rs/2GVwIyw

By Shreyansi Singh

Feb 27 (Reuters) - Gold prices rose on Thursday as the rapid spread of coronavirus outside China fuelled demand for safe-haven assets and bolstered bets for interest rate cuts by major central banks, while palladium scaled an all-time high on supply deficit worries.

Spot gold XAU= rose 0.6% to $1,648.63 per ounce by 0836 GMT. Prices jumped more than 1% in intraday trade on Wednesday before closing 0.3% higher.

U.S. gold futures GCcv1 were up 0.5% at $1,650.50.

"Safe-haven demand is strong at the moment on the global economic impact of the coronavirus. There are growing expectations that central banks will certainly need to take action if it continues to spread, particularly outside China," ANZ analyst Daniel Hynes said.

Governments ramped up measures on Thursday to battle the coronavirus as the number of infections outside China, the source of the outbreak, for the first time surpassed those appearing inside the country. health authorities, managing 59 cases so far, warned of the potential for a pandemic, although President Donald Trump said the risk from coronavirus remained "very low". and Asian share markets slipped on Thursday, as investors sought safety in gold and bonds, while U.S. Treasuries rallied into record territory on concerns over the global spread of the coronavirus. MKTS/GLOB US/

Investors, meanwhile, have increased bets for a rate cut by the U.S. Federal Reserve to ease the impact on the economy, according to an analysis of Fed funds futures compiled by the CME Group (NASDAQ:CME) FEDWATCH .

Money markets have also priced in cuts by the European Central Bank and the Bank of England. are already pricing in some decent cuts to rates across the globe so that's the clear driver of (gold) prices and demand," ANZ's Hynes said.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Among other precious metals, palladium rose 0.7% to $2,807.65 per ounce, after hitting a record high of 2,847.50 earlier in the session.

A correction in palladium prices is likely but the metal is rallying on deficit concerns and overall positive sentiment in precious metals, said Jigar Trivedi, a commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai.

Platinum XPT= rose 0.6% to $916.56, having earlier slid to its lowest level since December.

Silver XAG= gained 1.0% to $18.05 an ounce, after touching a one-week low in the previous session.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Gold and risk assets

https://tmsnrt.rs/3cfwKzx Palladium and platinum

https://tmsnrt.rs/3addeSn

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