Gold. Picture: REUTERS
Gold. Picture: REUTERS

Bengaluru — Gold jumped 1% on Monday to a near three-week high as growing concerns that the coronavirus outbreak could impact the global economy pushed investors towards safe havens.

Spot gold was up 0.6% at $1,580.45 an ounce by 12.21pm GMT, having earlier touched its highest since January 8 at $1,586.43.

US gold futures rose 0.5% to $1,579.50 an ounce.

“Risk aversion is pushing up gold prices. Weekend news showed that (the coronavirus) is still spreading in many countries across the globe and this could impact economic activity and market sentiment,” Commerzbank analyst Carsten Fritsch said.

Safe-haven flows were such that a US dollar holding near two-month highs scaled in the previous session was doing little to deter gold buying, despite it making dollar-denominated bullion costlier for investors holding other currencies.

The death toll from the coronavirus outbreak has risen to 81 in China, with 2,744 confirmed cases, and the virus has spread to more than 10 countries, including the US and France.

World shares slipped to their lowest in two weeks, while US 10-year Treasury yields fell to their lowest in more than three months.

“Despite the strength of the greenback, the bullion price is taking advantage of this uncertain situation,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.

“The main trend remains bullish, with the short-term correction seen in the last few weeks seemingly over, increasing the chance of the price achieving a new seven-year-high in the next few weeks.”

Gold had scaled a near seven-year high of $1,610.90 an ounce, earlier in the month, but the rally was short lived.

Investors will be watching the US Federal Reserve’s first policy meeting of this year on January 28-29, where it is widely expected to keep rates unchanged.

Elsewhere, silver rose 0.9% to $18.24 an  ounce, having earlier touched its highest since January 8 at $18.33.

Deficit-hit palladium dropped 2.2% to $2,373.69 an ounce, having touched a record high of $2,582.19 last week, while platinum fell 1.1%, to $990.37.

Palladium prices fell on profit-taking but the correction has not been considerable and long lasting, Commerzbank’s Fritsch said, adding, a stronger downward correction is overdue in the market.