Gold jumps to 7-year high on fears virus will hit global growth

Risk aversion raises metal’s safe-haven appeal; silver also joins club with 1% rise

Gold rose 1% on Friday to its highest in seven years as the spread of the coronavirus intensified concerns about its impact on economic activity and global growth, increasing the metal’s safe-haven appeal.

Spot gold rose 1.1% to $1,636.60 per ounce as of 18:26 IST, after hitting its highest since February 14, 2013 at $1,636.66 earlier this session. U.S. gold futures jumped 1.2% to $1,639.60.

Bullion has risen 3.3% so far this week, on track for its best week since early August.

“There is a rise in risk aversion again due to fears that the COVID-19 disease will spread further. The virus poses a major risk for the global economy,” Commerzbank analyst Carsten Fritsch said. This is likely to force western central banks to maintain easy monetary policy, he added.

South Korea reported 52 new cases, taking the national total to 156, while Japan reported the first fatalities from a cruise ship which accounted for the biggest cluster of infections outside China.

Meanwhile, China reported an uptick in new cases of COVID-19, boosted by over 200 people testing positive in two prisons outside of Hubei province, the epicentre of the outbreak.

The increase in number of new cases hit stock markets around the world, putting them on course for their worst week in four.

Among other safe havens, the U.S. government bonds gained as the benchmark 10-year treasury yields fell to its lowest since September.

Further spread of the disease could derail a “highly fragile” projected recovery in the global economy in 2020, the International Monetary Fund said on Wednesday.

Silver was up 1% at $18.53 and was set to register its strongest week since end-August. Platinum edged up 0.6% to $983.86 and was on track to post a weekly gain.

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