PRECIOUS-Gold drops over 1% as virus slowdown hopes boost stock markets

(Updates prices)
* U.S. gold futures extend lead over London spot prices
* World stock markets register a second day of sharp gains
* Gold stocks held in New York vaults jumped 50% since last
week

By Sumita Layek
April 7 (Reuters) - Gold prices fell over 1% on Tuesday,
retreating from a near one-month high hit earlier in the
session, as signs of slowdown in coronavirus cases in major
epicenters boosted equity markets, drawing away some of the
bullion's safe-haven appeal.
Spot gold XAU= fell 1% to $1,644.51 an ounce by 1:36 p.m.
EDT (1736 GMT), after touching $1,671.40.
"What we're seeing in equity markets is more of a
stabilization with the peaking (coronavirus) numbers in some
U.S. jurisdictions," said Bart Melek, head of commodity
strategies at TD Securities.
"All that really tells us is that there might be an end game
to this, but by no means is the world benign and risk friendly,"
he said, adding that expectations of more stimulus with lower
interest rates for the long term will continue to support gold
prices.
World stock markets registered a second day of sharp gains
on signs of progress against the coronavirus in both Europe and
the United States. MKTS/GLOB Eurozone finance ministers are likely to agree on measures
worth half a trillion euros for finance recovery, while Japanese
Prime Minister Shinzo Abe declared a state of emergency and
rolled out a nearly $1 trillion stimulus package to soften the
economic blow. Gold prices had risen as much as 3.2% in the previous
session.
"The underlying reason why we have rallied these past couple
days was not only due to the spread widening (between spot and
COMEX gold), but also the fact that we are seeing additional
measures being touted by central banks," said Saxo Bank analyst
Ole Hansen.
"They're already talking about the next package in the U.S.
to be released after Easter. As long as we see these initiatives
combined with the potential for a softer dollar, the upside
potential for gold is still there."
U.S. gold futures GCcv1 settled 0.6% lower at $1,683.70,
but held a lead over London spot prices, signaling market
concern that refinery closures and logistics constraints could
hamper bullion shipments to the United States to meet contract
requirements.
Gold stocks held in New York vaults registered with CME
Group have jumped almost 50% since the end of last week as the
exchange launched a new contract and a price premium since the
outbreak encouraged traders to stockpile. Palladium XPD= gained 1.9% at $2,195.30 an ounce, platinum
XPT= rose 0.5% to $738.66 and silver XAG= inched up 0.2% to
$15.