PRECIOUS-Gold scales two-week peak as virus fears fuel safe-haven bids

(Updates prices)

* U.S. confirms second case of coronavirus

* U.S. 10-year Treasury yields fall to two-week low

* Palladium sheds 3% en route to first weekly loss in 5

Jan 24 (Reuters) - Gold jumped to a more than two-week high on Friday as the latest updates on the coronavirus dented risk sentiment, and prompted a flight into safe-haven assets.

Spot gold was up 0.7% at $1,573.53 per ounce by 1:41 p.m. EST (1841 GMT), having hit a peak since Jan. 8 of $1,575.03 earlier in the session.

The metal was up 1% for the week so far.

U.S. gold futures settled 0.4% higher at $1,571.90 per ounce.

“The entire market just switched into risk-off mood,” said Bart Melek, head of commodity strategies at TD Securities.

The U.S. Centers for Disease Control and Prevention confirmed a second U.S. case of the coronavirus in the country, denting appetite for riskier assets.

This comes after the World Health Organization (WHO) designated the coronavirus outbreak an emergency for China but not for the rest of the world currently, and added it was tracking it “every minute.”

The spread of the virus ahead of this weekend’s Lunar New Year, a peak period of travel in China has kept investors concerned.

“Mounting concerns about the virus ahead of the weekend are driving accumulation of gold. ... Clearly, the headlines will get worse before they get better,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

Further developments surrounding the outbreak and a U.S. Federal Reserve meeting on Jan. 28-29 will be key drivers for gold into next week, Wong added.

Keeping with a global trend of accommodative monetary policy, the European Central Bank left rates unchanged on Thursday.

Gold is highly sensitive to any reduction in interest rates, which decreases the opportunity cost of holding non-yielding bullion.

Also helping non-interest-bearing bullion, U.S. 10-year Treasury yields fell to a two-week low.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.2% to 900.58 tonnes on Thursday.

Elsewhere, palladium slipped 1.8% to $2,417.10 per ounce, having shed more than 3% earlier in the session; and was on track to register its first weekly fall in five at about 2.6%.

Platinum rose 0.4% to $1,005.95, but was down 1.3% for the week so far.

Silver gained 1.8% to $18.11 per ounce, and had risen about 0.6% so far this week. (Reporting by Harshith Aranya, Brijesh Patel; additional reporting by Arpan Varghese in Bengaluru; editing by Jonathan Oatis and Marguerita Choy)