(Updates prices)
* Coronavirus fears grip South Korea, China reports drop
* SPDR Gold holdings rise to over 3-yr peak
* Palladium eases from record high
* Coronavirus interactive graphic: https://tmsnrt.rs/2GVwIyw
By Diptendu Lahiri
Feb 20 (Reuters) - Gold prices climbed to their highest
level in seven years on Thursday as an uptick in the number of
coronavirus cases in South Korea fueled worries over the wider
economic impact of the outbreak.
Spot gold XAU= rose 0.44% to $1,618.38 per ounce by 1:41
p.m. EST (1841 GMT), after hitting its highest level since
February 2013 at $1,623.45. U.S. gold futures GCcv1 settled up
0.5% at $1,620.50 per ounce.
"Now that gold has surpassed the $1,600 level, more
investors and traders will take positions now," said Michael
Matousek, head trader at U.S. Global Investors.
"Coronavirus is definitely a factor but we have a bunch of
other reasons like ... central banks keeping (interest) rates
negative, tariff-related issues with China and Europe," he
added.
The epidemic has disrupted China's economic growth and a
further spread to other countries could derail a "highly
fragile" projected recovery in the global economy in 2020, the
International Monetary Fund warned on Wednesday. Even as the number of new coronavirus cases in China slowed,
new research suggesting the virus was more contagious than
previously thought added to the alarm.
Daegu, a city of 2.5 million people in South Korea, has
become the latest victim of coronavirus outside China. South
Korea now has 104 confirmed cases of the flu-like virus, and
reported its first death. Beijing cut the benchmark lending rate and is likely to roll
out more measures to support an economy jolted by the virus
crisis. U.S. Fed policymakers also acknowledged new risks caused by
the epidemic, but were cautiously optimistic about their ability
to hold interest rates steady this year, minutes of the central
bank's last policy meeting showed on Wednesday.
"As long as the coronavirus problem is in the headlines,
gold prices will be very well supported at current levels. If
the situation deteriorates prices can even go higher," said SP
Angel analyst Sergey Raevskiy.
Data showed holdings of the world's largest gold-backed
exchange-traded fund, SPDR Gold Trust GLD , rose 0.2% to 931.60
tonnes on Wednesday, their highest since November 2016.
GOL/ETF
"Gold is being driven chiefly by robust investment demand:
gold ETFs registered inflows for the 21st day of trading in a
row yesterday, and speculative financial investors are likely to
have further expanded their net long positions as well,"
Commerzbank analysts said in a note.
Elsewhere, palladium XPD= was down 0.7% at $2,694.08 an
ounce, having touched a record high of $2,841.54 in the previous
session on supply deficit concerns.
Silver XAG= fell 0.3% to $18.34, while platinum XPT=
slipped 3% to $975.36.