PRECIOUS-Gold eases off 2-week peak; safe haven demand limits declines

(Adds comments, details; Updates prices)
* WHO convenes emergency meeting on China virus outbreak
* Lunar New Year celebrations to begin this weekend
* Palladium off record high, slips nearly 1%

By Diptendu Lahiri
Jan 21 (Reuters) - Gold briefly hit a two-week high on
Tuesday as concerns over the coronavirus outbreak in China
lifted demand for safe havens, but then retreated as investors
took profits on the view that buying had been overdone.
Still, lingering Mideast tensions and political uncertainty
in Washington kept prices above $1,550 an ounce.
Spot gold XAU= was down 0.6% at $1,552.05 per ounce by
1405 GMT, after hitting its highest since Jan. 8 at $1,568.35
earlier in the session. U.S. gold futures GCcv1 fell 0.5% to
$1,552.20 per ounce.
"The fear effect of the contagion in China has been a
trigger for gold but there is no strong evidence of it taking
the shape of an epidemic," OANDA analyst Craig Erlam said,
adding some investors were booking profits after the spike
earlier in the session.
Lingering uncertainties over tensions in the Middle East and
an impeachment trial against U.S. President Donald Trump kept
gold prices above the $1,550 level, Erlam said. A coronavirus outbreak that began in the central Chinese
city of Wuhan sent ripples through financial markets, as the
World Health Organization called a meeting for Wednesday to
consider declaring an international health emergency.
MKTS/GLOB
Bullion is considered a safe asset during times of financial
and political uncertainty.
Gold broke above $1,600 an ounce earlier this month after
the killing of an Iranian general in a U.S. airstrike heightened
tensions and the metal has been trading within a $50 range since
then.
"However, it is hard to see gold progressing above $1,600 an
ounce until the health emergency in China escalates sharply and
becomes a regional problem," Jeffrey Halley, senior market
analyst, OANDA, said in a note.
On the physical side, China's gold consumption fell for the
first time in three years in 2019, figures released by the
country's gold association showed on Tuesday, as high prices and
an economic slowdown hit buying in the world's biggest gold
market. Markets also kept a tab on developments in the World
Economic Forum in Davos and awaited the European Central Bank's
first policy meeting of the year this week. Palladium XPD= fell 3.3% to $2,416.19. The auto catalyst
metal hit a record high of $2,582.19 in the previous session.
Silver XAG= fell 1.9% to $17.72, while platinum XPT=
dropped 2.6% to $989.65 per ounce.