April 1, 2020 / 10:04 AM / 2 months ago

PRECIOUS-Gold surges as mounting fears over virus impact spur safe-haven buys

 (Updates throughout, adds comments)
    * Stocks slide as coronavirus threat remain intense
    * SPDR Gold Trust holdings up 0.3%
    * Global death toll from coronavirus over 38,000
            

    By Brijesh Patel
    April 1 (Reuters) - Gold jumped more than 1.5% on Wednesday
as concerns over an economic downturn due to a near global
lockdown to fight the coronavirus pandemic prompted investors to
seek safe havens.
    Spot gold        was up 1.3% at $1,591.46 per ounce by 0946
GMT, rebounding from a 3.1% slump in the last session. U.S. gold
futures         gained 0.6% to $1,606.30.
    "Gold once again underpinned its status as a safe haven
during the current corona crisis," Julius Baer analyst Carsten
Menke said in a note, adding: "Constraints to global air travel
and the closures of gold refineries are showing up in product
price premiums."
    "As the global recession unfolds and as uncertainties remain
very high in financial markets, we still see more upside than
downside for gold."
    Financial markets and oil prices tumbled in the first
trading session of the quarter as the pandemic and the prospect
of a global recession tore through investor confidence.
           
    Gold is often used as a safe store of value during times of
political and financial uncertainty and tends to appreciate on
expectations of lower interest rates, which reduce the
opportunity cost of holding it.
    Major central banks have rolled out fiscal and monetary
measures to try to limit economic damage from the coronavirus,
which has infected more than 851,000 people and forced lockdowns
across the globe.             
    "The ramification of easing monetary policy cycle and
trillion dollars of stimulus means the market will be full of
liquidity and ample supply of paper money in months, quarters or
years to come, and that's definitely supporting gold's rally
amid very limited supply (of physical bullion),"  said CMC
Markets analyst Margaret Yang Yan.
    On the supply side, three of the world's largest gold
refineries said they had suspended production in Switzerland for
at least a week after local authorities ordered the closure of
non-essential industry.             
    The dollar        also marched higher against major
currencies, gaining more than 0.5%.       
    On Tuesday, the U.S. Federal Reserve broadened the ability
of dozens of foreign central banks to access dollars during the
coronavirus crisis by allowing them to exchange their holdings
of U.S. Treasury securities for overnight dollar loans.
            
    Holdings in SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, rose 0.3% to 967 tonnes on
Tuesday.          
    Elsewhere, platinum        fell 0.5% to $718.56 per ounce,
while palladium        rose 0.7% to $2,367.02 and silver       
edged 0.3% higher to $14.01.
    

 (Reporting by Brijesh Patel and Arpan Varghese in Bengaluru;
Editing by Giles Elgood)
  
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