PRECIOUS-Gold climbs to 2-week high as China flu scare spurs safe-haven bids

(Updates prices)
* WHO convenes emergency meeting on China virus outbreak
* Lunar New Year celebrations to begin this weekend
* IMF cuts world growth forecast, BOJ keeps policy steady

By Asha Sistla
Jan 21 (Reuters) - Gold prices rose to a two-week high on
Tuesday as the spread of a new virus in China stoked fears of a
wider epidemic, sparking a sudden bout of risk aversion and
sell-off in Asian stocks.
Spot gold XAU= prices touched their highest since Jan. 8
at $1,568.35 and were up 0.1% to $1,563.01 per ounce by 0730
GMT. U.S. gold futures GCv1 were 0.3% higher at $1,564.10.
Asian shares slipped as the new coronavirus has spread to
more Chinese cities and concerns mounted it could spread further
with many travelling for the Lunar New Year holidays.
MKTS/GLOB Gold prices were driven by "the rapid spread of the virus
from Wuhan, China, which has caused panic", said Margaret Yang
Yan, a market analyst at CMC Markets.
"Chinese New Year holidays are going to worsen the situation
as people are bound to travel in China. The fear of outbreak is
going to drive up demand for gold for a couple more days," she
added.
China will start celebrating the Lunar New Year this
weekend.
The yen also gained on concerns of a wider outbreak, which
has prompted the World Health Organisation to convene an
emergency meeting to assess the situation. USD/ "However, it is hard to see gold progressing above $1,600 an
ounce until the health emergency in China escalates sharply and
becomes a regional problem," Jeffrey Halley, senior market
analyst, OANDA, said in a note.
Boosting safe-haven bids further, three Katyusha rockets
fell inside Baghdad's Green Zone which houses government
buildings and foreign missions, and the International Monetary
Fund on Monday trimmed its global growth forecasts for 2020 and
2021. Bullion is considered a safe asset during times of financial
and geopolitical uncertainty.
Meanwhile, the Bank of Japan kept monetary policy steady and
nudged up its economic growth forecasts, as the government's
spending package and receding pessimism over the global outlook
take some pressure off the central bank to top up stimulus.
Markets also kept a tab on developments in the World
Economic Forum in Davos and awaited the European Central Bank's
first policy meeting of the year this week. Palladium XPD= fell 0.5% to $2,486.78 an ounce. The
auto-catalyst metal hit a record high of $2,582.19 in the
previous session.
Silver XAG= was flat at $18.06 per ounce, while platinum
XPT= edged lower by 0.3% to $1,012.33.