(Updates prices)
* Precious metals bounce back after Friday's sell-off
* U.S. 10-year Treasury yields fall to record low
* GRAPHIC-2020 asset returns: http://tmsnrt.rs/2jvdmXl
By Sumita Layek
March 2 (Reuters) - Gold rose more than 1% on Monday,
recovering from its biggest one-day decline in nearly seven
years, on the potential for interest rate cuts by the U.S.
Federal Reserve to soften the economic impact from the
coronavirus outbreak.
Spot gold XAU= was up 0.8% at $1,596.94 an ounce at 1247
GMT and U.S. gold futures GCcv1 rose 2% to $1,598.20.
Amid a broad sell-off across global markets on Friday, gold
plunged by more than 4.5% for its biggest daily decline since
June 2013 as investors liquidated positions to meet margin calls
in other assets.
"The major price slump at the end of last week was overdone.
The situation remains in and around coronavirus causing
insecurity in the markets ... so gold prices are rising," said
Commerzbank analyst Eugen Weinberg.
Fed Chair Jerome Powell on Friday said the U.S. central bank
will "act as appropriate" to support the economy in the face of
risks posed by the coronavirus epidemic. The market expects about three interest rate cuts this year,
which is why the dollar is under so much pressure, Weinberg
added.
Futures now imply a 50 basis point rate cut 0#FF: at the
Fed's March 18 monetary policy meeting.
Lower interest rates reduce the opportunity cost of holding
non-yielding bullion and also weigh on U.S. yields and the
dollar, in which gold is priced.
Stephen Innes, chief market strategist at financial services
firm AxiCorp, said the negative correlation between the U.S.
currency and gold has reappeared since the dollar's safe-haven
appeal has faded.
The dollar index .DXY was on the back foot, while
benchmark U.S. 10-year Treasury yields US10YT=RR fell to a
record low. USD/ US/
Lower treasury yields continue to underpin pricing across
precious metals, though the market remains nervous after last
week's sharp declines, said trading services group MKS PAMP in a
note.
"Expect strong downside interest to remain through $1,570 -
$1,550, with the $1,550 pivot level the key for near-term price
direction," it added.
Other precious metals also rebounded from Friday's sharp
sell-off.
Palladium XPD= rose 0.1% to $2,595.04 an ounce, having
plunged as much as 13% on Friday for its biggest one-day decline
since the 2008 financial crisis.
Platinum XPT= gained 0.2% to $865.36 and silver XAG=
rose 0.8% to $16.79 after both fell to their lowest in about six
months in the previous session.
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Safe haven rush: gold versus dollar https://tmsnrt.rs/388cUmI
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