(Adds graphic and updates prices)
* U.S. government agrees to massive stimulus package
* Platinum, palladium extend gains on S. Africa lockdown
* Global coronavirus infections nearly 421,000
By K. Sathya Narayanan
March 25 (Reuters) - Gold prices fell on Wednesday, after a
steep rise in the previous session, as a flight to cash offset
optimism around the U.S. government agreeing on a massive
stimulus package to ease the economic burden of the coronavirus
pandemic.
In volatile trade, spot gold XAU= fell 1% to $1,594.18 per
ounce by 0743 GMT, after rising as much as 1.6% earlier in the
day. The metal jumped more than 3% on Tuesday.
U.S. gold futures GCv1 climbed 0.2% to $1,664.80.
"The recent development in gold prices has nothing to do
with fundamentals, it (the metal) has de-linked from its
safe-haven status... We are in unprecedented times and nothing
can be justified," said CMC Markets analyst Margaret Yang Yan.
"Investor sentiment remains very fragile and cautious, and
'cash is king' is still on top of people's mind, so the
volatility is likely to persist," she said, adding that there
was some shortage of physical supply to fulfil the futures
market's obligations.
Benchmark spot gold prices continued to trade below U.S.
gold futures in a sign that the market is worried air travel
restrictions and precious metal refinery closures will hamper
shipments of bullion to the United States to meet contractual
requirements. Investors were in two minds - whether to go for the safety
of gold or liquidate positions to cover losses on other
commodities and seek refuge in hard cash, said John Sharma, an
economist at National Australia Bank, adding that initial
expectations for the U.S. stimulus package had supported gold.
U.S. Senate majority leader Mitch McConnell said the fiscal
stimulus package, expected to be worth $2 trillion, had been
agreed upon and would be put to a vote later on Wednesday.
The virus had infected nearly 421,000 people across the
world by Wednesday, and has forced widespread lockdowns to
combat the spread.
Indicating investors' appetite for gold, holdings in the
world's largest gold-backed exchange-traded fund, SPDR Gold
Trust GLD , rose 1.3% to 935.98 tonnes on Tuesday. GOL/ETF
Among other precious metals, palladium XPD= climbed 1.9%
to $1,968.80 per ounce, while platinum XPT= gained 2.6% to
$726.61.
Both the metals surged more than 10% in the previous session
on the back of a lockdown in major producer South Africa.
Silver XAG= rose 0.8% to $14.38 per ounce.
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