PRECIOUS-Gold slips as virus panic offsets U.S. stimulus hopes

(Recasts, adds comments and updates prices)
* U.S. government agrees to massive stimulus package
* Platinum, palladium extend gains on S. Africa lockdown
* Global coronavirus infections at nearly 421,000

By Asha Sistla
March 25 (Reuters) - Gold prices retreated from a two-week
high hit earlier on Wednesday as concerns about a sharp rise in
coronavirus infections outweighed expectations of a $2 trillion
U.S. government stimulus package to soften the economic fallout.
Spot gold XAU= , which rose as much as 5% on Tuesday, was
down 0.4% at $1,604.28 per ounce at 1242 GMT, having earlier
risen as high as $1,635.79.
U.S. gold futures GCcv1 fell 1.7% to $1,632.10.
"The U.S. stimulus had a huge positive impact initially but
it was always questionable whether that would be sustainable in
an environment of rapidly rising coronavirus cases," OANDA
analyst Craig Erlam said.
"The big downside risk (in gold) remains the potential for
those sharp sell-offs in equity markets to be repeated,
especially following yesterday's huge rally."
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.
European stocks were choppy again on Wednesday with bourses
across the region wiping off most of their early morning gains.
.EU
The world has been reeling from the impact of the virus,
which has infected nearly 421,000 people and has forced
lockdowns across the globe to combat its spread. Spain reported 738 fatalities from the coronavirus in the
past 24 hours, the steepest increase since the epidemic hit the
country. Meanwhile in the UK, Prince Charles, the 71-year-old
heir to the British throne, has tested positive the virus.
"We still see a favourable backdrop for gold as the economic
fallout from the coronavirus crisis should strengthen safe-haven
demand," Julius Baer analyst Carsten Menke said. Holdings in the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust GLD , rose 1.3% on Tuesday. GOL/ETF
Benchmark spot gold prices traded below U.S. gold futures in
a sign that the market is worried that air travel restrictions
and refinery closures will hamper shipments of bullion to the
United States to meet contractual requirements. Among other metals, palladium XPD= rose 3% to $1,990.04
per ounce, while platinum XPT= gained 0.5% to $711.16. Both
climbed more than 10% in the previous session after a lockdown
in major producer South Africa. Silver XAG= fell 1.3% to $14.09 per ounce.

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