PRECIOUS-Gold jumps 2% as virus fears put premium on safety

(Updates prices)
* Euro zone markets price in ECB rate cut next week
* U.S. 10-year treasury yield fall back below 1%
* Dollar drops to near two-month low
* GRAPHIC-2020 asset returns: https://tmsnrt.rs/2jvdmXl

By Brijesh Patel
March 5 (Reuters) - Gold prices climbed 2% to a more than
one-week high on Thursday as worries over the global spread of
the coronavirus spurred more safe-haven flows and hopes of
further monetary policy easing by major central banks.
Spot gold XAU= was up 1.9% at $1,666.16 per ounce by 1:36
p.m. EST (1836 GMT). U.S. gold futures GCv1 settled 1.5%
higher at $1,668.
"Clearly as the equity markets are under pressure and there
are more concerns about the coronavirus, so obviously we are
seeing money flowing out of riskier assets into safe havens like
gold," said David Meger, director of metals trading at High
Ridge Futures.
"In addition, we continue to view gold as a quintessential
hedge against a flood of global central bank liquidity. Gold
continues to lead the charge and continues to be our favourite
alternative investment out there."
Equity markets tanked after California declared an emergency
over the epidemic as the death toll rose in the United States.
MKTS/GLOB There are now more than 90,000 COVID-19 coronavirus cases
globally, with over 3,000 deaths. The International Monetary Fund said on Wednesday the global
spread had crushed hopes for stronger growth this year, while a
Fed report showed there were signs the epidemic had begun to
weigh on U.S. business sentiment. The U.S. Fed and Bank of Canada have both responded by
cutting interest rates by 50 basis points. Markets in the euro
zone are pricing in a 90% chance that the European Central Bank
will cut its deposit rate next week.
"Gold's macro argument is simple. The virus hit to global
growth and low interest rates globally will keep gold prices
climbing higher," said Edward Moya, a senior market analyst at
broker OANDA, in a note.
Further supporting bullion, the dollar index .DXY slipped
0.5% to a near two-month low against a basket major of
currencies, while the U.S. 10-year treasury yield fell back
below 1%. USD/ US/
Elsewhere, palladium XPD= dropped 1.6% to $2,536.16 per
ounce.
"While we expect the price of palladium to be more volatile
over the coming weeks, we continue to anticipate it will trend
higher over the coming quarters, supported by solid
fundamentals," UBS said in a note.
"Despite weaker car sales (likely also related to the
coronavirus outbreak), we think 2020 will be a ninth consecutive
deficit year for the white metal."
Silver XAG= gained 1.1% to $17.36 per ounce, while
platinum XPT= slipped 0.7% to $866.33.