Gold surges as virus impact fears spur safe-haven purchases

• Spot gold was up 1.1pc at $1,587.61 per ounce at 1114 GMT, rebounding from a 3.1pc slump in the last session.
• The dollar also marched higher against major currencies, gaining more than 0.5pc.
• Reflecting investors' interest in bullion, the Perth Mint's gold product sales in March soared to their highest in about seven years, the refiner said on Wednesday.

Gold jumped more than 1.5pc on Wednesday as concerns the near global lockdown to fight the coronavirus pandemic would spark a deep economic downturn prompted investors to seek safe havens.

Spot gold was up 1.1pc at $1,587.61 per ounce at 1114 GMT, rebounding from a 3.1pc slump in the last session. U.S. gold Futures gained 0.4pc to $1,603.60.

"Gold once again underpinned its status as a safe haven during the current corona crisis," Julius Baer analyst Carsten Menke said in a note, adding: "Constraints to global air travel and the closures of gold refineries are showing up in product price premiums."

"As the global recession unfolds and as uncertainties remain very high in financial markets, we still see more upside than downside for gold."

Financial markets and oil prices tumbled in the first trading session of the quarter as the pandemic and the prospect of a global recession tore through investor confidence.

Gold is often used as a safe store of value during times of political and financial uncertainty and tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding it.

Major central banks have rolled out fiscal and monetary measures to try to limit economic damage from the coronavirus, which has infected more than 851,000 people and forced lockdowns across the globe.

"The ramification of easing monetary policy cycle and trillion dollars of stimulus means the market will be full of liquidity and ample supply of paper money in months, quarters or years to come, and that's definitely supporting gold's rally amid very limited supply (of physical bullion),"  said CMC Markets analyst Margaret Yang Yan.

On the supply side, three of the world's largest gold refineries said they had suspended production in Switzerland for at least a week after local authorities ordered the closure of non-essential industry.

The dollar also marched higher against major currencies, gaining more than 0.5pc.

On Tuesday, the U.S. Federal Reserve broadened the ability of dozens of foreign central banks to access dollars during the coronavirus crisis by allowing them to exchange their holdings of U.S. Treasury securities for overnight dollar loans.

Reflecting investors' interest in bullion, the Perth Mint's gold product sales in March soared to their highest in about seven years, the refiner said on Wednesday.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.3pc to 967 tonnes on Tuesday.

Elsewhere, platinum dropped 1.6pc to $710.95 per ounce, silver slipped 0.5pc to $13.90 and palladium was steady at $2,351.94.