Gold rises more than 1% as coronavirus hits global economies

Gold jumped more than 1% to a more than one-week high on Monday as worries over a global economic slowdown caused by the coronavirus pandemic drove investors to the safe-haven metal.

Spot gold was up 1.1% at $1,634.95 per ounce by 0930 GMT, its highest since March 26. U.S. gold futures were up 1.2% at $1,665.40.

“The virus’s impact on the global economy and the unprecedented amount of stimulus going through the veins of the financial system should keep supporting gold,” OANDA analyst Craig Erlam said.

“Gold seems to have its eye on $1,700 per ounce and I wouldn’t be surprised to see it push higher.”

The pandemic has infected more than a million people, killed over 68,000 and prompted countries to extend lockdowns to curb its spread, paralysing large swathes of the global economy.

In the latest move on damage control from the virus, Japan is likely to take “all steps” encompassing fiscal, monetary and tax policies in a stimulus package to be approved on Tuesday, a draft document seen by Reuters showed.

Gold is highly sensitive to interest rates, as lower rates reduce the opportunity cost of holding non-yielding bullion.

Japanese Prime Minister Shinzo Abe, meanwhile, will declare a state of emergency over the pandemic as early as Tuesday, the Yomiuri newspaper reported.

“From a long-term standpoint, gold will still remain the preferred asset as the environment of low interest rates and virus-induced global slowdown would support a prolonged rally,” said Sugandha Sachdeva, vice-president, metals, energy and currency research at Religare Broking Ltd.

New car registrations in Britain fell by an annual 40% in March due to the coronavirus crisis, preliminary data from an industry group showed on Monday.

Platinum gained 1.6% to $731.91, while silver climbed 1% to $14.54.