PRECIOUS-Gold eases off 3-week peak as equities sell-off pauses

(Adds comment, updates prices)
* Coronavirus death toll rises to 106 as of Jan. 27
* Dollar scales near two-month peak
* U.S. 10-year Treasury yields fall to lowest since Oct. 10
* Fed meeting starts later in the day

By K. Sathya Narayanan
Jan 28 (Reuters) - Gold edged down on Tuesday from the
previous session's near three-week high as equities regained
some ground, but concerns the coronavirus outbreak could impact
the global economy cushioned safe-haven bullion's losses.
Spot gold XAU= was down 0.2% to $1,578.13 per ounce as of
1202 GMT, having touched its highest since Jan. 8 on Monday.
U.S. gold futures GCcv1 were steady at $1,577.40.
"The flight to safety is not continuing today. Equity
markets have stabilized, European equities are broadly flat, so
the wave of risk aversion that swept across the financial
markets seems to be off," said Julius Baer analyst Carsten
Menke.
European markets rebounded early after the previous day's
thumping, while the U.S. dollar .DXY rose to a near two-month
high. USD/ MKTS/GLOB
However, concerns the coronavirus outbreak could hinder the
global economy persist, Menke said, adding reactions to the
spreading virus had been very different across markets and the
decline in oil prices suggested a slowdown of economic activity
in China. O/R
Gold is seen as a safe-haven during times of economic and
political uncertainties.
The death toll from the virus reached 106 in China and some
health experts questioned whether Beijing can contain the virus
which has spread from the city of Wuhan to more than 10
countries. The outbreak has prompted authorities to impose travel
restrictions and extend the Lunar New Year holidays, which
helped bullion to rise for the past four sessions.
"Fears over the Wuhan virus have driven the rally (in gold),
but it appears that investors much prefer the safety of
high-grade government bonds to the yellow metal," Jeffrey
Halley, senior market analyst, OANDA, said in a note.
Benchmark U.S. 10-year Treasury yields fell to their lowest
since Oct. 10. Government bonds are also considered a safe-haven
asset during times of economic and political uncertainty. US/
Also on investors' radar was the U.S. Federal Reserve's
first policy meeting of the year, scheduled to start later in
the day. Fed Fund futures FEDWATCH show traders expect the
U.S. central bank to keep interest rates unchanged.
Lower interest rates reduce the opportunity cost of holding
non-yielding bullion.
Elsewhere, palladium XPD= jumped 1.1 % to $2,292.89 an
ounce, having declined about 7% in the previous session.
"Palladium is already recouping some of its losses again
this morning. (However,) we assume that the correction will
continue, as the upswing beforehand was exaggerated in our
opinion," Commerzbank analyst said in a note.
Silver XAG= fell 0.7% to $17.96, while platinum XPT=
rose 0.1% to $983.98.