March 18, 2020 / 10:10 AM / 10 days ago

PRECIOUS-Gold tumbles as virus fears outweigh U.S. stimulus

 (Updates prices)
    * European shares dip
    * Virus infections near 200,000 worldwide
    * Break below $1,450 in gold could trigger move to $1,380-
analyst
    * GRAPHIC-2020 asset returns: tmsnrt.rs/2jvdmXl

    By Sumita Layek
    March 18 (Reuters) - Gold fell as much as 2.7% on Wednesday
as concerns over the global economic impact from the coronavirus
outweighed stimulus measures by the United States, forcing
investors to dump most assets for the safety of cash.
    Spot gold        fell 1.2% to $1,510.38 per ounce by 1235
GMT, having earlier risen more than 1%. U.S. gold futures
        were down 0.9% to $1,511.90 an ounce.
    "People are expecting a recession to come ... so, there is
panic selling across energy, base and precious metals," said
Jigar Trivedi, a commodities analyst at Anand Rathi Shares and
Stock Brokers in Mumbai.
    "Liquidity pumping from central bankers and policy changes
are not working in favour of the markets. We're looking at an
economic solution to the current epidemic, but the epidemic
itself is the root cause. Unless there is a vaccine, the (panic
in) markets will not stop."
    The virus, which has so far infected nearly 200,000 people
and killed more than 8,000 worldwide, has wreaked havoc in
markets as countries around the world go into lockdown to
contain the spread.             
    Following U.S. stock futures and Asian shares, European
equities fell on fears over the economic damage from the
pandemic.            
    On Tuesday, gold had risen more than 2% after the U.S.
Federal Reserve said it would reinstate a funding facility used
during the 2008 financial crisis to get credit directly to
businesses and households on fears of a liquidity crunch due to
the virus.            
    Meanwhile, the Trump administration pursued a $1 trillion
stimulus package that could deliver $1,000 checks to Americans
within two weeks to cushion the economy.
    Britain launched a new lending scheme to provide short-term
bridging finance for large businesses hurt by the epidemic,
which will be run and funded by the Bank of England.
            
    "The key for the (gold) market is to hold $1,450 as it
otherwise could trigger a move to $1,380, the old breakout
level," said Saxo Bank analyst Ole Hansen.
    Elsewhere, autocatalyst palladium        dropped 4.3% to
$1,573.22 per ounce, while platinum        fell 3.4% to $639.09.
    "We're facing a major demand shock as car sales and consumer
confidence take a major hit. The key to the short term outlook
is whether the long liquidation phase has run its course,"
Hansen said.
    "Considering we continue to see lower highs, we may not yet
have seen all the selling."
    Silver        was 2.8% lower at $12.23.

 (Reporting by Sumita Layek and Arpan Varghese in Bengaluru
Editing by Nick Tattersall and Jane Merriman)
  
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