PRECIOUS-Gold surges 1.5% on growing coronavirus concerns

(Updates prices)
* Gold, silver on track to post best week in six months
* World shares, U.S. stocks stage broad retreat
* Palladium eyes 10% weekly gain

By Diptendu Lahiri
Feb 21 (Reuters) - Gold jumped more than 1.5% on Friday to
its highest level in seven years as investors rushed to the
metal's safety due to concerns over global economic fallout from
the fast-spreading coronavirus.
Spot gold XAU= rose 1.7% to $1,646.89 per ounce by 01:46
p.m. EST (1846 GMT), after hitting its highest level since Feb.
13, 2013, at $1,648.75 earlier in the session. U.S. gold futures
GCcv1 settled up 1.7% at $1,648.80.
Bullion has risen 4% so far this week, on track for its best
week since late June.
"Markets are once again anxious because the coronavirus
outbreak is possibly spreading outside China. There is huge
amount of safe-haven demand as economic slowdown in China, Japan
and Germany is expected to persist in the first half of the
year," said Edward Moya, a senior market analyst at broker
OANDA.
"Expectations are pretty high that central banks will
deliver stimulus across the board. That will continue to prop up
gold prices."
South Korea reported 52 new cases, taking the national total
to 156, while Japan reported the first fatalities from a cruise
ship which accounted for the biggest cluster of infections
outside China.
China also reported an uptick in new cases. The increase in the number of newly infected weighed on
stocks in the United States and across the world.
MKTS/GLOB .N
U.S. business activity in both the manufacturing and
services sectors stalled in February as companies have grown
increasingly concerned about the outbreak, a survey of
purchasing managers showed on Friday. Poor economic data from the United States tends to drive
expectations for an interest rate cut by the Federal Reserve.
Lower interest rates decrease the opportunity cost of
non-yielding bullion.
Elsewhere, palladium XPD= fell 0.2% to $2,683.91 but was
up about more than 10% this week. It hit a record high of
$2,841.54 on Wednesday, fueled by a prolonged supply shortfall.
However, net-long positions in palladium 3075651MNET have
fallen to 6,062 contracts in the week to Feb. 11, their lowest
mark since September 2018.
In terms of technicals, the market is overbought, indicating
that "the trend is coming to an end," so speculators are
reducing their net-long positions on fears of a possible
downward correction, said Peter Fertig, an analyst at
Quantitative Commodity Research.
Silver XAG= was up rose 1.2% to $18.57 and was set to
register its strongest week since end-August. Platinum XPT=
fell 0.3% to $974.92.

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