Gold hits 7-year high as global markets slide on coronavirus fears

Later, profit-taking unwound must of the precious metal's rise

LONDON: Gold prices hit a more than seven-year high on Monday and breached $1,700 level as a stock market rout on concerns over the widening coronavirus cases and its economic impact drove investors to safe-haven assets, although profit-taking later unwound much of the metal's rise.

Autocatalyst metal palladium, meanwhile, slid as much as 8% in early trade amid the wider risk-off sentiment.

Spot gold rose 0.4% to $1,680.07 an ounce by 1136 GMT, having touched its highest since December 2012 at $1,702.56. US gold futures rose 0.5% to $1,680.20.

Gold had been up as much as 1.7% in a volatile session.

"We've this two-way battle going on between leveraged hedge funds, who need to reduce again, and investors trying to find some safe haven away from falling stock markets, especially the energy sector," said Saxo Bank analyst Ole Hansen.

European equities slumped by 7% and US stock futures hit the loss limit as investors sought refuge in safe havens.

Oil prices dived by more than a quarter after Saudi Arabia cut its official prices, putting crude on track for its biggest daily slump since the first Gulf War. Gold is often viewed as a hedge against oil-led inflation.

"It's red across the board - all energy is down, all grains are down, all soft commodities are down, all metals are down, with gold being the one exception," Hansen said.

Investor focus next turns to the European Central Bank meeting due on Thursday.

"We think that the ECB will follow the lead of the US Federal Reserve and will likewise loosen its monetary policy, which should lend further buoyancy to the gold price," Commerzbank analysts said in a note.

Palladium fell 5.5% to $2,424.04 an ounce, having earlier dipped to its lowest since February 12 at $2,352.

"Given the theme of risk reduction and deleveraging at the forefront, palladium is being caught up in that ... limited liquidity has created problems and that's why it's being pushed to this extent," Hansen said.

Palladium had gained about 54% in 2019 on supply issues.

In other precious metals, silver fell 2.2% to $16.94 an ounce while platinum was down 3.4% at $870.56.