March 12, 2020 / 4:25 AM / 20 days ago

PRECIOUS-Gold gains as virus fears deepen after U.S. travel ban

 (Updates prices, edits paragraph one)
    * Investors await ECB meeting at 1230 GMT
    * Interactive graphic on coronavirus spread: open tmsnrt.rs/3aIRuz7
 in external browser
    * GRAPHIC-2020 asset returns: tmsnrt.rs/2jvdmXl

    By Asha Sistla
    March 12 (Reuters) - Gold rose on Thursday on worries about
the economic impact of the coronavirus as the United States
suspended travel from virus-hit Europe, while palladium fell
nearly 6% as the pandemic threatened demand for the autocatalyst
metal.
    Spot gold        rose 0.5% to $1,642.46 per ounce by 0854
GMT. U.S. gold futures         were unchanged at $1,642.20.
    The travel ban "is a big surprise and a big shock to the
market" and shows that investors are yet to see the full
financial fallout from the coronavirus outbreak, said IG Markets
analyst Kyle Rodda.
    On the flip side, traders are selling gold to fund margin
calls, capping the metal's gains, Rodda added.
    U.S. President Donald Trump on Wednesday announced the
suspension of all travel from Europe, except from the United
Kingdom, to the United States for 30 days, leading to a sell-off
in global stock markets and the dollar.                   
                          
    However, the bullion did pare some gains from the 0.9% jump
it saw earlier during the volatile session and stood well below
a 7-year peak of $1,702.56 scaled on Monday.
    "Gold is now feeling the pinch from the fall in financial
markets and travel ban. So, investors will keep money out of the
markets for some time or book profits from the high levels,
because of which we've seen some selling pressure in gold," said
Vandana Bharti, assistant vice-president of commodity research
at SMC Comtrade.
    The World Health Organization (WHO) on Wednesday described
the new coronavirus as a pandemic, with more than 119,100 people
infected globally.                          
    Global central banks have taken steps to shield their
economies from the outbreak, with the Bank of England being the
latest to cut interest rates on Wednesday. The U.S. Federal
Reserve reduced rates in an emergency move last week.
    The European Central Bank is expected to follow suit when it
holds its meeting later in the day.               
    Lower interest rates reduce the opportunity cost of holding
non-yielding bullion.
    Elsewhere, auto-catalyst metal palladium        dipped 3.2%
to $2,232.09, having earlier fallen as much as 5.9% to a near
two-month low.  
    "Palladium is one of the riskier assets," SMC Comtrade's
Bharti said, adding that reduced demand from the automobile
sector is weighing on the metal.
    The metal has shed about 22% since hitting an all-time high
of $2,875.50 on Feb. 27, as demand concerns begin to overshadow
a sharp supply shortfall of the metal.
    Silver        fell 0.4% to $16.69, while platinum       
slid 0.9% to $852.51.

 (Reporting by Asha Sistla and K. Sathya Narayanan in Bengaluru
Editing by Aditya Soni and Uttaresh.V)
  
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