PRECIOUS-Gold rises after Fed rate cut, but pares gains on cash hunt

(Updates prices)
* Fed slash rates for second time this year
* U.S. dollar falls from over 2-week high
* Palladium falls more than 5%

By K. Sathya Narayanan
March 16 (Reuters) - Gold prices jumped in early trade on
Monday after another emergency rate cut by the U.S. Federal
Reserve, before paring gains as some investors sold the metal
for cash amid a sell-off in equities.
Spot gold XAU= was up 0.2% at $1,532.12 per ounce by 0726
GMT, having risen as much as 2.8% earlier. The metal fell 3% on
Friday. U.S. gold futures GCcv1 rose 1% to $1,531.60 per
ounce.
Prices rose initially due to the surprise Fed rate cut, said
CMC Markets analyst Margaret Yang Yan, adding that: "The market
is very indecisive and there are divergent opinions. Investors
are now dumping everything. They just want cash."
The Fed slashed rates back to near zero, restarted bond
buying to help put a floor under a rapidly disintegrating global
economy amid the escalating coronavirus pandemic.
The Fed's rate cuts and restarting of quantitative easing
are positives for gold, but "we're in an unconventional time and
theory might not apply in a time of high volatility and
divergence", Yan said.
The dollar fell from a more than two-week high and stock
markets plunged after the Fed cut rates for the second time this
year to soften the economic blow from the economic shock.
MKTS/GLOB USD/
The benchmark U.S. 10-year Treasury yields fell, resuming
its march towards an all-time low touched last week, while the
safe-haven yen JPY= rose from a two-week low against the
dollar. US/
A widespread pandemic causing a global shutdown, emergency
rate cuts and falling U.S. dollar should be "nirvana for gold",
Jeffrey Halley, a senior market analyst at OANDA, said in a
note.
"Unfortunately, these are not normal times and the usual
rules don't seem to apply anymore," he said.
Generally, lower interest rates reduce the opportunity cost
of holding non-yielding bullion, and weigh on the dollar, making
greenback-denominated gold cheaper for investors holding other
currencies.
The Fed's latest cut could support gold in the medium to
longer term as it suggests the economy is in a downtrend and the
negative impact of coronavirus is likely to continue, said
Hareesh V, head of commodity research at Geojit Financial
Services.
Following the Fed, New Zealand slashed rates to a record
low, while European Union finance ministers plan to agree on a
coordinated economic response. In a volatile trade, palladium XPD= fell 1% to $1,788.76,
having fallen more than 5% earlier. Platinum XPT= slipped 0.8%
to $755.50 per ounce, while silver XAG= fell 1.5% to $14.45.