Gold Gains on Coronavirus Risks, But Uptick in Stocks Caps Gains

Washington: Gold edged up on Thursday on safe-haven buying fuelled by worries about the fast-spreading coronavirus, but a rise in equity markets limited bullion's gains.

Spot gold inched higher by 0.2% to $1,639.44 per ounce by 0335 GMT. U.S. gold futures were up 0.2% to $1,640.10.

"When we see support for both gold and the dollar, it's an indication of safe-haven desire from investors," said Michael McCarthy, chief market strategist at CMC Markets.

The dollar recovered following recent declines, finding support from robust jobs data from the United States on Wednesday.

The U.S. Federal Reserve's surprise interest rate cut on Tuesday to shield the world's largest economy from the economic impact of the epidemic also supported non-yielding bullion.

Equities too latched on to global measures to battle the fast-spreading virus outbreak, with Asian shares also tracking strong overnight gains on Wall Street following the strong performance of former U.S. Vice President Joe Biden in the Democratic nomination campaign.

"If this (equity) rally continues for 3-4 days, markets could take that as an all-clear in terms of economic impact of the virus and we might see pressure on gold. It's a very volatile situation," CMC Markets' McCarthy said.

However, the virus risks continued to support safe-haven interest.

The International Monetary Fund said on Wednesday the global spread has crushed hopes for stronger growth this year, while a Fed report showed there are signs the epidemic has begun to weigh on business sentiment in the United States as well.

Investors are now waiting to see whether the European Central Bank would also announce new stimulus, with euro zone markets pricing in a 90% chance of deposit rate reduction next week.

In other metals, palladium slipped 1.7% to $2,532.40 per ounce.

"The auto sector supply chain will be impacted by COVID-19. Although, this demand shock is expected to have limited impact on palladium due to structural deficit backdrop, we see room for further setbacks following the recent rally," ANZ Bank analysts said in a note.

The autocatalyst slumped as much as 13% on Feb. 28, following a record run to an all-time high of $2,875.50 on Feb. 27 due to a stark supply shortfall.

Silver inched up 0.2% to $17.21 per ounce, while platinum shed 0.4% to $868.79.