March 4, 2020 / 1:41 AM / a month ago

PRECIOUS-Gold extends gains on surprise Fed rate cut

    March 4 (Reuters) - Gold prices rose on Wednesday, after
surging more than 3% in the previous session as the U.S. Federal
Reserve cut interest rates to help soften the economic blow from
the coronavirus outbreak. 
    
    FUNDAMENTALS
    * Spot gold        climbed 0.3% to $1,644.97 an ounce by
0052 GMT, having registered its biggest one-day percentage gain
since 2016 in the previous session.
    * U.S. gold futures        gained 0.2% to $1,646.80.
    * The Fed cut interest rates on Tuesday in an emergency move
to safeguard the world's largest economy from the impact of the
coronavirus epidemic.             
    * However, the decision failed to calm investor nerves, with
all three major U.S. stock indexes closing nearly 3% lower
overnight, while Asian shares wobbled on Wednesday.     
           
    * Lower interest rates reduce the opportunity cost of
holding non-yielding bullion while weighing on Treasury yields
and the dollar.
    * U.S. benchmark 10-year Treasury yields             hovered
close to record lows touched in the previous session, when they
slid below 1% for the first time.      
    * The Hong Kong Monetary Authority (HKMA) lowered its base
rate charged through the overnight discount window by 50 basis
points.             
    * G7 finance ministers and central bank governors said on
Tuesday they would use all appropriate policy tools to achieve
strong, sustainable growth and safeguard against risks from the
virus, which has fuelled global recession fears.             
    * The World Health Organization warned of a global shortage
and price gouging for protective equipment to fight the epidemic
and asked companies and governments to increase production by
40% as the death toll mounted.             
    * Demand for platinum from the auto industry will rise this
year for the first time since 2016 but it won't be enough to
offset a decline in investment buying, leaving the global market
in surplus again, the World Platinum Investment Council said.
            
    * Palladium        slipped 0.4% to $2,490.62 per ounce,
while platinum        was up 0.1% at $875.62.
    * Silver        rose 0.3% to $17.22 an ounce.
    
DATA/EVENTS (GMT)    
0145 China   Caixin Services PMI (Feb)
0855 Germany Markit Services, Composite Final PMIs (Feb)
0900 EU      Markit Services, Composite Final PMIs (Feb)
0930 UK      Reserve Assets Total (Feb)
1445 U.S.    Markit Composite, Services Final PMIs (Feb)
1500 U.S.    ISM Non-manufacturing PMI (Feb)
1900 U.S.    Federal Reserve issues Beige Book of economic
condition

 (Reporting by K. Sathya Narayanan in Bengaluru; Editing by
Subhranshu Sahu)
  
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