January 28, 2020 / 6:04 AM / a month ago

PRECIOUS-Gold eases ahead of Fed meeting; virus fears persist

(Adds comment, updates prices)

* Coronavirus death toll rises to 106 as of Jan 27

* Fed meeting scheduled to start on Tuesday

* SPDR gold holdings fell 0.1% on Monday

By Asha Sistla

Jan 28 (Reuters) - Gold prices fell on Tuesday as investors booked profits from the recent rally and the dollar firmed, although concerns over a new coronavirus kept safe-haven bullion underpinned.

Spot gold fell 0.2% to $1,577.85 per ounce by 0820 GMT, after hitting a near three-week peak on Monday. U.S. gold futures were flat at $1,578.10.

Bullion rose for the past four sessions as the spread of the coronavirus rattled financial markets and prompted authorities to impose travel restrictions and extend the Lunar New Year holidays.

“Gold has been positive for the last few sessions and is witnessing profit booking now,” said Jigar Trivedi, a commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai adding “uncertainty and global growth concerns due to coronavirus are still there.”

Further weighing on gold, the dollar hovered close to a near two-month high hit earlier in the session.

“(Gold) could reach $1,600, but would be more around the $1,570-$1,590 levels as we need to get more information, there are a lot of unknown variables around the virus,” said John Sharma, an economist at National Australia Bank (NAB).

Asian shares extended a global selloff on Tuesday as the death toll from the virus reached 106 in China and some health experts questioned whether Beijing can contain the virus which has spread to more than 10 countries, including France and the United States.

Gold is considered a safe investment during times of economic and political uncertainty.

Investors will focus on the U.S. Federal Reserve’s first meeting of the year due later in the day, where it is widely expected to keep interest rates unchanged.

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

Gold looks to consolidate Monday’s gains as a number of traders are off for the Chinese New Year, pinning bullion towards $1,580, MKS PAMP analysts said in a note.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.13% to 899.41 tonnes on Monday.

In other precious metals, palladium jumped 2.4% to $2,323.09 an ounce, having declined as much as 7% in the previous session.

Silver fell 0.5% to $17.99, while platinum rose 0.3% to $986.50. (Reporting by Asha Sistla in Bengaluru; Editing by Aditya Soni and Louise Heavens)

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