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Gold rises 1.4% on flight to safety driven by pandemic fears

Bengaluru - Three of the world's largest gold refineries have suspended production in Switzerland for at least a week.

Gold rose more than one per cent on Wednesday as fears over a worsening coronavirus pandemic triggered a flight to safety, with expectations of further monetary easing by central banks adding support.
Spot gold was up 1.4 per cent at $1,592.83 per ounce by 0730 GMT, having slumped 3.1per cent in the previous session on a strong dollar. US gold futures gained 0.5 per cent at $1,604.50.
"Investors may be shifting to gold for safety," said CMC Markets analyst Margaret Yang Yan, who saw the rebound spurred by President Donald Trump's remarks that the next two weeks of the pandemic could be painful for the United States.
"The ramification of easing monetary policy cycle and trillion dollars of stimulus means the market will be full of liquidity and ample supply of paper money in months, quarters or years to come, and that's definitely supporting gold's rally amid very limited supply (of physical bullion)."
Gold is considered an attractive investment during times of political or economic uncertainty. It is highly sensitive to interest rates, as lower rates reduce the opportunity cost of holding the non-yielding bullion.
The Federal Reserve on Tuesday broadened the ability of dozens of foreign central banks to access US dollars during the crisis by allowing them to exchange their holdings of US Treasury securities for overnight dollar loans.
Limiting physical gold's supply, three of the world's largest gold refineries said they had suspended production in Switzerland for at least a week after local authorities ordered the closure of non-essential industry.
Russia has also stopped gold purchases.
In equities, Asian stocks clung to gains, supported by positive China PMI data, but risks remain large as the pandemic rattles the underpinnings of the global economy.
"The tentative signs of improvement in data from China has given some renewed confidence to the region ... expect that to support both equity and gold prices in Asia this morning," said Jeffrey Halley, a senior market analyst at OANDA.
Holdings in SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.3 per cent to 967 tonnes on Tuesday.
Palladium slid 1.6 per cent to $2,314.80 per ounce, platinum
fell 0.6 per cent to $717.66 and silver edged 0.1 per cent higher at $13.99.