* Dollar rebounds from a 2-week low
* China coronavirus death toll rises
* Gold specs cut bullish positions in week to Jan. 28 - CFTC
Feb 3 (Reuters) - Gold fell 1% on Monday, retreating from its highest level in nearly four weeks as China’s steps to protect its economy from the impact of the coronavirus outbreak and a buoyant dollar stemmed some inflows into safe-haven assets.
Spot gold fell as much as 1% and was down 0.8% at $1,577.11 per ounce as of 1321 GMT.
Prices touched the highest since Jan. 8 earlier in the session. U.S. gold futures shed 0.4% to $1,581.70.
China’s central bank unexpectedly lowered the interest rates on reverse repurchase agreements and injected 1.2 trillion yuan ($171 billion) of liquidity into markets as authorities sought to relieve pressure on the economy from the rapidly spreading virus.
“Uncertainty is generally supportive for gold but we have also seen China taking measures to support the economy. This is something financial markets are taking positively,” said Julius Baer analyst Carsten Menke, adding that a rebound in the dollar was adding to gold’s weakness.
European and U.S. shares were a little higher, but a gauge of global stocks hovered near seven-week lows. The U.S. dollar was up about 0.3% against its main rivals, having recovered from a two-week low touched in the previous session.
“Once we get through this ‘band-aid effect’, the reality will set in that there is an economic tumult about to happen in China, which is going to spread globally and force a lot of central banks to cut rates,” said Stephen Innes, chief market strategist at AxiCorp.
Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.
Physical gold markets in major Asian hubs saw activity dwindle last week as the epidemic took a toll on demand, especially with top consumer China out of action.
People’s anxiety about going out because of the outbreak during the Lunar New Year holidays in China, usually a strong seasonal driver for bullion demand, will have a negative impact on the gold market, said Julius Baer’s Menke.
Speculators cut their bullish positions in COMEX gold contracts in the week to Jan. 28, data showed on Friday.
Elsewhere, palladium was up 0.6% at $2,290.92 an ounce, silver fell 1.5% to $17.76, while platinum fell 0.1% to $955.57.
$1 = 7.0155 Chinese yuan renminbi Reporting by K. Sathya Narayanan and Sumita Layek in Bengaluru; Editing by Barbara Lewis and Pravin Char
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