Gold scales more than 3-week peak as coronavirus hits global economies

Spot gold rose 0.2% to $1,618.90 per ounce by 0053 GMT

Image used for illustrative purpose. U.S. dollar bills are displayed in Toronto in this posed photo, March 26, 2008.

Image used for illustrative purpose. U.S. dollar bills are displayed in Toronto in this posed photo, March 26, 2008.

REUTERS/Mark Blinch

Gold jumped 1.5% to a more than three-week high on Monday as worries over a global economic slowdown caused by the coronavirus pandemic drove investors to the safe-haven metal.

Spot gold was up 1.5% at $1,640.40 per ounce by 1237 GMT after hitting its highest since March 12 earlier in the session. U.S. gold futures were up 1.7% at $1,673.30.

"The virus's impact on the global economy and the unprecedented amount of stimulus going through the veins of the financial system should keep supporting gold," OANDA analyst Craig Erlam said.

"Gold seems to have its eye on $1,700 per ounce and I wouldn't be surprised to see it push higher."

The pandemic has infected more than a million people, killed over 68,000 and prompted countries to extend lockdowns to curb its spread, paralysing large swathes of the global economy. 

In the latest move aimed at limiting damage from the virus, Japan is likely to take "all steps" encompassing fiscal, monetary and tax policies in a stimulus package to be approved on Tuesday, a draft document seen by Reuters showed. 

Gold is highly sensitive to interest rates, as lower rates reduce the opportunity cost of holding non-yielding bullion.

Japanese Prime Minister Shinzo Abe, meanwhile, will declare a state of emergency over the pandemic as early as Tuesday, the Yomiuri newspaper reported. 

"From a long-term standpoint, gold will still remain the preferred asset as the environment of low interest rates and virus-induced global slowdown would support a prolonged rally," said Sugandha Sachdeva, vice-president, metals, energy and currency research at Religare Broking Ltd.

Reflecting increased investor interest in gold, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD, rose 0.7% to 978.99 tonnes on Friday - the highest in more than three years. 

On the physical side, three of the world's biggest gold refineries said they would partly reopen after a two-week closure that disrupted global supply. 

Among other precious metals, autocatalyst palladium was down 1.7% at $2,150.87 per ounce after slipping more than 3% in early trade.

New car registrations in Britain fell by an annual 40% in March due to the coronavirus crisis, preliminary data from an industry group showed on Monday. 

Platinum gained 1% to $727.50 per ounce, while silver climbed 0.9% to $14.52.

(Reporting by Brijesh Patel in Bengaluru; Editing by Mark Potter and David Evans) ((; Within U.S. +1 651 848 5832, Outside U.S. +91 8067493865; Reuters Messaging:

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