February 6, 2020 / 5:35 AM / 10 days ago

PRECIOUS-Gold gains as markets assess economic impact of virus

(Adds comments and updates prices)

* China to halve some U.S. tariffs starting Feb. 14

* Stocks rise, dollar hits a two-month high

* Spot gold may rise into $1,564-$1,570/oz range - technicals

By Asha Sistla

Feb 6 (Reuters) - Gold inched higher on Thursday as investors evaluated the economic impact of the coronavirus outbreak as the death toll jumped past 500, but the gains in bullion were capped by China’s decision to halve tariffs on U.S. imports.

Spot gold was up 0.2% to $1,559.50 per ounce by 0835 GMT. Prices fell to $1,546.90 on Wednesday, the lowest since Jan. 21. U.S. gold futures were flat at $1,563.30.

The death toll from the virus in mainland China jumped to 563, as experts stepped up efforts to combat a disease that has shut down Chinese cities and forced thousands more into quarantine around the world.

“Globally, people are looking at the coronavirus more than anything else and also how that would affect the global economy. That is supporting gold at this point of time,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

“It (cutting of tariffs) is countered by how the virus is going to affect the economy, businesses and China’s GDP.”

China on Thursday said it would halve additional tariffs levied against 1,717 U.S. goods last year, following the signing of a Phase 1 deal that brought a truce to a bruising trade war between the world’s two largest economies.

Positive data from the United States including a rise in January private payrolls and services sector activity were also keeping gold prices in check.

Asian stocks gained after China’s announcement to cut tariffs on U.S. goods and U.S. stocks hit a record peak on encouraging U.S. data.

The dollar hit a two-month high earlier in the session, making gold expensive for holders of other currencies.

The World Health Organization on Wednesday played down reports of “breakthrough” drugs being discovered to treat people infected with the new coronavirus.

“The virus spreading into new areas and new countries at alarming rates could bring real support to gold prices,” said Michael McCarthy, chief market strategist at CMC Markets.

Spot gold may rise into a range of $1,564 to $1,570 per ounce, as it has stabilised around a support at $1,549, said Reuters technical analyst Wang Tao.

Palladium fell 1.1% to $2,405.80 an ounce and silver rose 0.6% to $17.71. Platinum was down 0.3% to $978.46, after touching a one-week high of $987.60 earlier in the session. (Reporting by Asha Sistla in Bengaluru; editing by Uttaresh.V and Christian Schmollinger)

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