(Recasts, updates prices)
* Platinum hits two-month low
* Gold up over 3% so far this month
* Coronavirus interactive graphic: tmsnrt.rs/2GVwIyw
By Harshith Aranya
Feb 26 (Reuters) - Gold prices gained on Wednesday following a steep fall in previous sessions as concerns over the coronavirus outbreak and its impact on global economy raised hopes of interest rate cuts by major central banks.
Spot gold was up 0.7% at $1,645.79 per ounce by 1:40 p.m. EST (1840 GMT) after falling more than 1.5% in the last session.
U.S. gold futures settled 0.4% lower at $1,643.10 an ounce.
“Besides the safe-haven demand, a growing number of people are buying in anticipation of weaker growth from the spread of coronavirus and action from the U.S. Federal Reserve,” said Ryan McKay, a commodity strategist at TD Securities.
“The market is well saturated with bullish news. I think we are seeing some participants taking profit here ... especially the longs are taking advantage,” he added.
Gold is up over 3% so far this month, having hit a seven-year high of $1,688.66 earlier this week as the rapidly spreading coronavirus aggravated fears of an economic slowdown.
The effects of the outbreak are likely to reverberate beyond China as most major economies in the region are expected to either slow significantly, halt or shrink in the current quarter, Reuters polls found.
Money markets are now pricing in roughly two 25-basis-point (bps) rate cuts by the U.S. Federal Reserve, and expect a 10 bps cut by the European Central Bank by December.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Indicative of rising investor interest in bullion, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, climbed to the highest level since November 2016 at 940.09 tonnes on Tuesday.
“Considering that a couple of uncertainties are still lingering in the market, along with the coronavirus threat and very low yields, investors are taking positions at a lower price,” said Bob Haberkorn, senior market strategist at RJO Futures.
“If we see yields at these levels and no other positive news come about the virus situation, we will see gold go back to levels it hit earlier.”
The dollar rebounded from a two-week low and U.S. markets also opened higher, after suffering their worst four-day percentage fall in over a year in the previous session.
Elsewhere, palladium gained 1.8% to $2,748.93 per ounce, while platinum fell 1.5% to $911.79, having touched its lowest price in over two months earlier.
Silver eased 0.2% to $17.96 an ounce, having fallen as much as 3.4% in the previous session.
Reporting by Brijesh Patel and Diptendu Lahiri in Bengaluru; Editing by Tom Brown and Matthew Lewis