March 16, 2020 / 1:20 AM / 25 days ago

Gold jumps as emergency Fed rate cut weighs on dollar, equities

(Reuters) - Gold prices rose nearly 3% on Monday, following a steep decline in the previous session, as the dollar and global equities fell sharply after the U.S. Federal Reserve made another surprise interest rate cut.

FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo

FUNDAMENTALS

* Spot gold was up 1.4% at $1,550.26 per ounce by 0030 GMT, having risen as much as 2.8% earlier. The metal fell 3% on Friday.

* U.S. gold futures rose 2.4% to $1,553.30 per ounce.

* The Fed slashed rates back to near zero, restarted bond buying and joined other central banks to ensure liquidity in dollar lending to help put a floor under a rapidly disintegrating global economy amid the coronavirus pandemic.

* Stock markets and the dollar fell heavily, after emergency rate cuts in the United States and New Zealand failed to allay fears about the coronavirus’ economic shock.

* New Zealand’s central bank slashed interest rates by 75 basis points to a record low following an emergency meeting as it prepared for a “significant” hit to the economy from the virus.

* Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

* The benchmark U.S. 10-year Treasury yields fell, resuming its march towards an all-time low touched last week.

* European Union finance ministers plan to agree on Monday on a coordinated economic response to the epidemic, with the European Commission forecasting the effects of the virus could push the EU into a recession.

* Manufacturing in Britain weakened sharply in early 2020 even before concerns about the virus crisis escalated, adding urgency to the need for a trade deal with the European Union, an industry survey showed.

* Physical gold markets in major Asian hubs last week reeled from the impact of the outbreak and dealers offered deeper discounts in top consumer China.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 1.33% to 931.59 tonnes on Friday.

* Speculators reduced their bullish positions on COMEX gold and silver contracts in the week to March 10, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

* Palladium fell 3.1% to $1,750.50 per ounce, while platinum slipped 0.8% to $755.50.

* Silver gained 0.7% to $14.78 per ounce.

Reporting by K. Sathya Narayanan in Bengaluru

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