PRECIOUS-Gold surges over 4% after Fed unveils new stimulus plans

(Updates prices)
* Dollar dives from three-year peak
* SPDR gold holdings fall 1.5% on Friday
* Interactive graphic tracking global spread of coronavirus:
open
https://tmsnrt.rs/3aIRuz7 in an external browser

By Brijesh Patel
March 23 (Reuters) - Gold prices soared more than 4% on
Monday, shrugging off early losses after the U.S. Federal
Reserve took aggressive new steps to combat the economic impact
of the coronavirus outbreak, boosting investor sentiment.
The U.S. central bank said it would begin backstopping an
unprecedented range of credit for households, small businesses
and major employers in an effort to offset the "severe
disruptions" caused by the coronarvirus outbreak. Spot gold XAU= jumped 4.1% to $1,559.55 an ounce by 01:48
p.m. EDT (1748 GMT). U.S. gold futures GCcv1 settled 5.5%
higher at $1,567.60 an ounce.
"The Fed unveiled its biggest cannon seen to date - even
bigger than in the great financial crisis," said Tai Wong, head
of base and precious metals derivatives trading at BMO.
"The market reacted instantly with equities and gold soaring
behind the Fed's new 'Draghi' approach. However, the acid test
here is whether this optimism will hold for more than one day."
U.S. stock index futures surged more than 3%, while the
dollar .DXY fell over 1% against major currencies after the
Fed's latest announcement. MKTS/GLOB USD/
After already aggressively easing monetary policy this
month, including sending interest rates to near zero, the U.S.
central bank said it would now lend against student loans and
credit card loans as well as buy bonds of larger employers.
Major central banks around the world rolled out a wave of
fiscal and monetary measures to stem the economic damage from
the virus, which has infected more than 300,000 worldwide.
Gold has dropped nearly 2% so far this month, as a collapse
in stock markets drove investors to liquidate bullion to meet
margin calls and to keep their money in cash.
"When you're seeing so much wiped off the stock market on a
regular basis, the shortfall has to be made up somehow and gold
remains the favoured option," OANDA analyst Craig Erlam said in
a note.
"So far, $1,450 has provided a floor, but the trend is
against it and sellers aren't easing up."
Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust GLD , fell 1.5% to 908.19 tonnes on
Friday. GOL/ETF
Among other precious metals, silver XPD= jumped 4.9% to
$13.19 an ounce, on track for its third straight session of
gains.
Platinum XPT= gained 3.8% to $634.32 per ounce, while
palladium XPD= rose 1% to $1,658.50.

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