· Gold prices fell 1% on Monday as investors booked profits after the metal rose above the $1,700 per ounce level for the first time in more than seven years on fears of deeper economic fallout from the coronavirus outbreak.
Spot gold fell 0.6% to $1,663.35 per ounce by 0553 GMT, having touched its highest since December 2012 at $1,702.56 earlier. U.S. gold futures slipped 0.4% to $1,665.30.
· The sell-off was "more technical than anything else. Traders had put $1,700 as their (price) target, so there is a lot profit-taking once that target was reached," said Avtar Sandu, a senior commodities manager at Phillip Futures.
However, he said the selling was temporary, adding that part of it was due to margin calls as the fast-spreading virus landed a sharp blow on global equities.
Global stocks tumbled, while U.S. stock futures plunged 5% as investors sought refuge in safe havens.
The yen jumped to a more than 3-year high against the dollar, U.S. 10-year Treasury yields fell to a record low.
· Gold prices jumped as much as 1.7% earlier in the session, due to a massive flight to safety as Chinese trade data came out worse than expected, Italy quarantined a quarter of its population due to the coronavirus and stock markets were down, according to Jeffrey Halley, a senior market analyst at OANDA.
China's exports contracted sharply in the first two months of the year while imports declined, data showed on Saturday, as the epidemic caused massive disruptions to business operations, global supply chains and economic activity.
Italy ordered a virtual lockdown across much of its wealthy north on Sunday, in an attempt to contain the outbreak, which will impact some 16 million people and stay in force until April 3.
A Reuters poll showed that the virus, which has now infected more than 110,000 people worldwide, likely halved China's economic growth in the current quarter compared with the previous three months.
Markets are expecting another rate cut from the U.S. Federal Reserve at its policy meeting on March 18, following last week's emergency easing.
· Meanwhile, the slump in crude oil prices sent deflationary shocks in the market and weighed on bullion, OANDA's Halley said.
Oil fell around 30%, and gold is often seen as a hedge against oil-led inflation.
· In a report, Sunday, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said that the low bond yield and falling equity markets could signal even lower prices for energy commodities and base metals.
"It's not that profound to expect commodities to keep falling until the stock market shows clears signs of a sustained recovery, in our view. Key deflationary brethren -- plunging bond yields and the strong dollar -- indicate the commodity bear is simply emerging from hibernation," he said in the report.
Friday, McGlone said that he could see gold prices pushing to $1,800 an ounce because of rising bond prices, which are the inverse to yields.
· Silver fell 3.9% to $16.63 per ounce. Palladium fell 4% to $2,463 per ounce, while platinum was down 3% to $873.50.
Reference: Reuters
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