PRECIOUS-Gold hits three-week high as virus fears spur flight to safety

* Coronavirus death toll rises to 81 in China
* U.S. 10-year Treasury yields fall to over 3-month low
* Fed meeting on Jan. 28-29
* Palladium sheds nearly 6%

(Updates prices)
By Diptendu Lahiri
Jan 27 (Reuters) - Gold climbed to a near three-week high on
Monday as mounting concerns over the economic fallout of the
coronavirus outbreak sent investors scurrying for safe havens.
Spot gold XAU= was up 0.4% at $1,577.31 per ounce by 1:50
p.m. EST (1850 GMT). Prices rose to $1,586.43, the highest level
since Jan. 8, earlier in the session.
U.S. gold futures GCv1 settled 0.3% higher at $1,577.4 per
ounce.
"Safe-haven buying has been triggered by this virus in China
and we're seeing a big sell-off in equity markets ... It's
mostly panic, the markets are looking at the prospect of the
Chinese economy slowing down," said Edward Meir, analyst at ED&F
Man Capital Markets.
"We could hit the recent highs above $1,600s if this thing
deteriorates."
The death toll from the coronavirus outbreak has risen to 81
in China, with 2,800 confirmed cases, and the virus has spread
to more than 10 countries, including the United States and
France. U.S. stocks opened more than 1% lower, while U.S. 10-year
Treasury yields fell to their lowest level in more than three
months. US/ .N
"The main trend (in gold) remains bullish, with the
short-term correction seen in the last few weeks seemingly over,
increasing the chance of the price achieving a new 7-year-high
in the next few weeks," ActivTrades Chief analyst Carlo Alberto
De Casa said in a note.
Gold scaled a near 7-year high of $1,610.90 per ounce
earlier in the month after an Iranian general was killed in an
U.S. airstrike, but the rally was short-lived.
Investors will be watching the U.S. Federal Reserve's first
policy meeting of this year on Jan. 28-29, where it is widely
expected to keep rates unchanged. FEDWATCH
In other metals, deficit-hit palladium XPD= dropped 5.8%
to $2,287.46 per ounce. Platinum XPT= fell 1.8% to $983.76 per
ounce.
"Palladium had seen a big run until now, it can't go up
forever. Somewhere some correction has to happen," ED&F Man
Capital Markets' Meir said.
Silver XAG= fell 0.2% to $18.05 per ounce, having earlier
touched its highest level since Jan. 8 at $18.33.