PRECIOUS-Volatile gold slides from 7-year peak as traders cover margins

(Updates prices)
* Gold still on track for best week since Feb. 2016
* Global stocks, oil tumble; U.S. Treasury yields at record
low
* Platinum climbs over 3%; set for best week in seven

By Harshith Aranya
March 6 (Reuters) - Gold prices swung more than 1% on
Friday, sliding from a seven-year high as investors sold the
precious metal to cover margin calls as the rapid spread of the
coronavirus hammered equity markets.
Spot gold XAU= was up 0.1% at $1,671.24 per ounce by 1:58
p.m. EST (1858 GMT). U.S. gold futures GCcv1 settled 0.3%
higher $1,672.40.
Gold jumped 1.2% to its highest since January 2013 at
$1,689.65 earlier in the session, but then shed all those gains
to drop as much as 1.4%.
"We are seeing a lot of volatility in the equity markets,
fairly large losses and uncertainty bringing the S&P below
3,000. We are most likely seeing liquidation of gold in order to
cover margin calls," said Bart Melek, head of commodity
strategies at TD Securities.
"This is very reminiscent of what happened in the
corrections during the financial crisis."
U.S. stocks tanked and the Dow Jones Industrials shed nearly
2%, while government bonds rallied as traders worried about a
prolonged economic slowdown. MKTS/GLOB US/ .N
Oil prices also collapsed more than 8% to their lowest
levels since mid-2017. O/R
"This dip (in gold) should be bought up fairly quickly as
the day goes on. As long as this virus is in the headlines out
there, expect gold to continue higher," said Bob Haberkorn,
senior market strategist at RJO Futures.
Despite the losses, safe-haven gold is still on course for
its biggest weekly gain since February 2016.
Nearly 60 new coronavirus cases were confirmed in the United
States on Thursday. Globally, virus cases surpassed 100,000 and
over 3,300 deaths have been reported. The International Monetary Fund on Wednesday said the
outbreak would hold 2020 global output gains to the slowest pace
since the 2008-2009 financial crisis. The epidemic poses "evolving risks" to the U.S. economy and
central bank officials are monitoring developments closely, New
York Federal Reserve President John Williams said on Thursday.
The Federal Reserve made an emergency 50-basis-point
interest rate cut on Tuesday, its first inter-meeting cut since
2008. Lower interest rates reduce the opportunity cost of
holding non-yielding bullion. U.S. nonfarm payrolls data showed a robust increase in
hiring in February, but the report may not reflect the full
impact from the outbreak. Palladium XPD= dipped 0.5% to $2,520.92 per ounce and
silver XAG= was down 0.9% at $17.26 an ounce.
Platinum XPT= rose 3.1% to $891.08, on track to post its
best week since mid-Janaury.
The second-largest platinum group metals producer, Anglo
American Platinum AMSJ.J , had slashed its output outlook due
to a shutdown following an explosion.