Gold prices hit seven-year high on coronavirus worries

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

In a volatile session, spot Gold touched its highest since December 2012 at $1,702.56 before being knocked back to stand 0.5% lower at $1,665.68 per ounce by 0926 GMT. US Gold futures shed 0.4% to $1,666.

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"Traders had put $1,700 as their (price) target, so there was a lot profit-taking once that target was reached," said Avtar Sandu, a senior commodities manager at Phillip Futures.

Gold touched its highest since December 2012 at $1,702.56. File photo

He added that part of the selling was because of the need to meet margin calls as the fast-spreading virus landed a sharp blow on global equities.

Jeffrey Halley, a senior market analyst at OANDA, also pointed to a slump in crude oil prices, which sent deflationary shocks through the market, as a cap on bullion's upside.

Losing more than a quarter of their value, oil prices were set for their biggest daily rout since the first Gulf War after Saudi Arabia cut its official prices. Gold is often seen as a hedge against oil-led inflation.

Stock markets were lower across the board, with U.S. stock futures also down 5%, while the Japanese yen jumped to a more than 3-year high against the dollar and US 10-year Treasury yields fell to a record low.

Halley said worse than expected Chinese trade data and Italy's move to quarantine a quarter of its population because of the coronavirus had helped spook markets and prompt the flight to safety.

Pointing to the impact from the virus epidemic, China's exports contracted sharply in the first two months of the year while imports declined, data showed on Saturday.

Reuters