(Updates prices, recasts to show G7 meeting under way)
* G7 conference call started at 1200 GMT
* Markets price in Fed rate cut of at least 0.25 percentage points
* Global equities rise on central bank stimulus hopes
* GRAPHIC-2020 asset returns: tmsnrt.rs/2jvdmXl
By Sumita Layek
March 3 (Reuters) - Gold prices rose on Tuesday on hopes of interest rate cuts by central banks as leading policymakers from the Group of Seven (G7) nations met to discuss how to contain the economic impact from the global coronavirus outbreak.
Spot gold was up 0.8% at $1,602.85 an ounce by 1217 GMT, having gained more than 1% in the previous session. U.S. gold futures firmed 0.6% to $1,604.10.
“The Fed fund futures have seen a shift from just pricing in one rate cut this year to three now. These shifting expectations have resulted in the weakening of the dollar and a supportive environment for gold prices,” said FXTM market analyst Han Tan.
Markets are pricing in a cut of at least 25 basis points to the current 1.5-1.75% target rate at the U.S. Federal Reserve’s March 17-18 meeting as well as a 10 basis point cut to the ECB’s key rate at its March 12 meeting.
The dollar index held close to the previous session’s one-and-a-half-month low against a basket of currencies.
Investors are now focused on a G7 conference call on Tuesday, in which finance ministers and central bank governors will discuss ways to bolster their economies in the face of the spreading coronavirus outbreak.
Bank of England Governor Mark Carney said global policymakers are working on a “powerful and timely” response to allay fears of a new global recession.
“Global economic conditions were fragile entering into 2020 and any hopes of them recovering in light of the expected dilution in trade tensions were snuffed out because of this coronavirus outbreak,” FXTM’s Tan said.
Gold prices slumped more than 4.5% on Friday amid a broader market sell-off but have recovered since.
“I think we have done enough on the downside (in gold) for the time being and with much talk of rate cuts/stimulus in the offing, the next move should be upwards,” said David Govett, head of precious metals at Marex Spectron.
“However, this does depend on the scale of the support offered by central banks.”
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.
Meanwhile, global equities also rose on expectations of central bank stimulus.
Among other precious metals, palladium rose 0.5% to $2,535.an ounce, silver gained 0.7% to $16.84 and platinum was up 0.7% at $866.70.
Reporting by Sumita Layek and Harshith Aranya in Bengaluru Editing by Kirsten Donovan and David Goodman