PRECIOUS-Gold firms as central bank stimulus offsets buoyant risk appetite

(Adds comment, updates prices)
* Palladium slides 5% to over 1-month low
* Deficit in palladium market could narrow- analyst
* For an interactive graphic tracking the global spread,
open https://tmsnrt.rs/3aIRuz7
in an external browser

By Eileen Soreng
May 5 (Reuters) - Gold steadied above $1,700 an ounce on
Tuesday, as massive global stimulus measures to ease the
economic blow from the coronavirus pandemic offset improved risk
sentiment on the back of easing restrictions and lockdowns.
Meanwhile, auto catalyst metal palladium shed as much as 5%
to its lowest since March 24 at $1,747.31 per ounce.
Spot gold XAU= was up 0.2% at $1,705.57 per ounce at 2:05
p.m. EDT (1805 GMT). U.S. gold futures GCv1 settled down 0.2%
at $1,710.60.
"There's a lot of stimulus sloshing around the system,
central banks are going to be very easy, rates will be zero for
perhaps years on end and stock market is very volatile. So all
of that's a tailwind for gold, big declines are being bought
into," said Edward Meir, analyst at ED&F Man Capital Markets.
However, general optimism with some global economies opening
up, which could mean interest rates will move a little bit
higher, should strengthen the dollar and pressure gold, he
added.
The pandemic, which has battered growth worldwide and
prompted governments to unleash fiscal and monetary measures to
limit economic damage, has infected about 3.6 million people
globally and killed more than 250,000. Gold tends to benefit from widespread stimulus measures from
central banks because it is widely viewed as a hedge against
inflation and currency debasement.
"Gold continues to toy with the $1,700/oz level...
Quantitative easing and unprecedented fiscal stimulus has
provided a positive backdrop for gold, but the physical market
is very weak," Standard Chartered analysts said in a note.
GOL/AS
Stock markets, meanwhile, snapped a three-day losing streak
and oil was on its longest run of gains in nine months as moves
to ease major economies out of lockdowns lifted sentiment.
MKTS/GLOB
Italy and the United States were among several countries to
tentatively ease lockdowns on Monday. MKTS/GLOB
Also limiting gold's appeal was a robust dollar. .DXY
USD/
Market participants also kept an eye on rising China-U.S.
tensions, with President Donald Trump urging China to be
transparent about the origins of the novel coronavirus outbreak.

Elsewhere, palladium XPD= dropped 3% to $1,792.08 per
ounce.
"With COVID-19 wreaking havoc on the auto industries, it
turns out the demand side of the equation is briefly at pause,"
said Daniel Ghali, commodity strategist at TD Securities.
"We're actually expecting the deficit to narrow by a very
significant extent."
Palladium, primarily used by automakers for
catalytic-converter manufacturing to clean vehicle-exhaust
fumes, scaled a record peak of $2,875.50 in late February,
bolstered by a chronic shortage of the metal.
Platinum XPT= rose 0.3% to $768.08 and silver XAG= rose
0.8% to $14.96.