(Adds comment and updates prices)
* Euro zone markets price in 90% chance of ECB rate cut next week
* Gold looks neutral in a range of $1,631-$1,653/oz -technicals
* GRAPHIC-2020 asset returns: tmsnrt.rs/2jvdmXl
By Asha Sistla
March 5 (Reuters) - Gold edged higher on Thursday on safe-haven buying fuelled by worries about the fast-spreading coronavirus outbreak, but a rise in equity markets limited bullion’s gains.
Spot gold was up 0.2% at $1,637.89 per ounce by 0754 GMT. U.S. gold futures were down 0.3% at $1,638.70.
“(The virus) has spread to over 80 countries and tensions are escalating day-by-day; investors don’t know what will happen next and they prefer investing in gold because of its safe-haven appeal,” said Hareesh V, head of commodity research at Geojit Financial Services.
Virus-related geopolitical uncertainties are supporting gold despite firming equity markets, he added.
Asian shares rose on Thursday, tracking overnight gains on Wall Street following the strong performance of former U.S. Vice President Joe Biden in the Democratic nomination campaign.
“If this (equity) rally continues for three-four days, markets could take that as an all-clear in terms of economic impact of the virus and we might see pressure on gold. It’s a very volatile situation,” said Michael McCarthy, chief market strategist at CMC Markets.
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 business sentiment in the United States as well.
The U.S. Federal Reserve’s surprise interest rate cut on Tuesday to shield the world’s largest economy from the economic impact of the epidemic also supported non-yielding bullion.
Investors are now waiting to see whether the European Central Bank would also announce new stimulus, with euro zone markets pricing in a 90% chance of deposit rate reduction next week.
Spot gold looked neutral in a range of $1,631-$1,653 per ounce, Reuters technical analyst Wang Tao said.
In other metals, palladium slid 2.6% to $2,509.98 per ounce.
“The auto sector supply chain will be impacted by COVID-19. Although, this demand shock is expected to have limited impact on palladium due to structural deficit backdrop, we see room for further setbacks following the recent rally,” ANZ Bank analysts said in a note.
The autocatalyst metal slumped as much as 13% on Feb. 28, following a record run to an all-time high of $2,875.50 on Feb. 27 due to a stark supply shortfall.
Silver inched down 0.1% to $17.16 per ounce, while platinum shed 0.3% to $870.10.
Reporting by Asha Sistla in Bengaluru; Editing by Maju Samuel and David Evans