March 12, 2020 / 9:57 AM / 16 days ago

PRECIOUS-Gold prices rise as stocks plunge on U.S. travel ban

 (Updates prices)
    * Investors await ECB meeting at 1230 GMT
    * Interactive graphic on coronavirus spread: open tmsnrt.rs/3aIRuz7
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    * GRAPHIC-2020 asset returns: tmsnrt.rs/2jvdmXl

    By Sumita Layek
    March 12 (Reuters) - Gold prices rose on Thursday as
investors shunned risky assets after the United States announced
a travel ban from virus-hit Europe, exacerbating fears of a
global economic downturn.
    Spot gold        was up 0.4% to $1,640.81 per ounce at 1140
GMT. U.S. gold futures        shed 0.1% to $1,641.
    European shares sank to their lowest in almost four years
after the United States announced a 30-day restriction on travel
from Europe's 26-country Schengen Area - which excludes Britain
and Ireland - in an attempt to halt the fast-spreading
coronavirus.                   
    "There has been a massive sell-out in equity markets ...
gold is profiting from the insecurity in the markets, the huge
volatility and the price slump in stocks," said Commerzbank
analyst Eugen Weinberg.
    "It seems as if coronavirus is the black swan of 2020 ...
most of the actions by authorities don't seem to reassure
markets. The market is being driven by the news and sentiment,
which is very downbeat and cautious."
    The coronavirus, which has infected more than 121,000 people
in 118 countries and killed over 4,300, was described as a
pandemic by the World Health Organization (WHO) on Wednesday.
                         
    Global central banks have taken steps to shield their
economies from the outbreak, with the Bank of England being the
latest to cut interest rates on Wednesday. The U.S. Federal
Reserve reduced rates in an emergency move last week.
    "We still have to see the real impact on the economy, the
coronavirus is just developing and spreading, we are just in the
starting phase ... central banks can try to limit the downside a
bit, but it cannot solve the corona problem," said ABN Amro
analyst Georgette Boele.
    Investors are now focused on a European Central Bank policy
meeting later in the day where it is expected to unveil new
stimulus measures to cope with the shock of the
pandemic.            
    Lower interest rates reduce the opportunity cost of holding
non-yielding bullion.
    Elsewhere, auto-catalyst metal palladium        dipped 4.5%
to $2,201.41, having earlier fallen as much as 5.9% to a near
two-month low.
    "Palladium is one of the riskier assets," said Vandana
Bharti, assistant vice-president of commodity research at SMC
Comtrade, adding reduced demand from the automobile sector was 
weighing on the metal.
    Silver        fell 1.2% to $16.56, while platinum       
lost 3.1% to $833.19.

 (Reporting by Sumita Layek in Bengaluru, additional reporting
by Asha Sistla, editing by Mark Potter and Emelia
Sithole-Matarise)
  
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