AU yeah! Gold surges more than 2% hitting 7-year highs

AU yeah! Gold surges more than 2% hitting 7-year highs

Spot gold jumped to a seven-year high of 1,678.58 after marking its biggest weekly gain last week since early August.

The Dow Jones Industrial Average fell 1,031.61 points, or 3.56%, to 27,960.8, the S&P 500 lost 111.86 points, or 3.35%, to 3,225.89 and the Nasdaq Composite dropped 355.31 points, or 3.71%, to 9,221.28. The virus to date has been mainly focused within mainland China, and multinational businesses in the worldwide manufacturing, retail and tourism industries have been concerned about its spread for quite sometime, as quarantine restrictions have a direct impact on factory slowdowns and travel in China, having the potential to decimate first-quarter earnings reports.

"Ultimately this is all a risk-off trade", said Marvin Loh, senior global markets strategist at State Street Global Markets.

Outside mainland China, the outbreak has spread to about 29 countries and territories, with a death toll of about two dozen, according to a Reuters tally.

The World Health Organization (WHO) said it is anxious about the growing number of cases without any clear link to China.

As reports of new cases emerged from other countries, investors moved away from equity markets and parked their capital in gold, which is considered a safe haven for investors.

Yields on top-rated, tax-exempt US municipal bonds fell to all-time lows of 1.01% in 10-year paper and 1.6% in 30-year debt, according to Municipal Market Data. The benchmark 10-year Treasury yield fell to its lowest level since July 2016.

Worries over the coronavirus outbreak also pushed European stocks down, with the pan-European STOXX 600 down 3.7 percent, reaching the lowest since the end of January. This is why gold prices are rising.

Along with gold, silver is also seeing a sharp rise on Monday.

Gold prices fell on Tuesday receding from record highs touched in the previous session.

Goldman has predicted that gold is headed towards $1,750/oz while Citi has said it could reach $2,000/oz within the next 12 to 24 months.

Among other precious metals, silver eased about 0.3% to $18.58 per ounce.

Reflecting increased investor interest in bullion, speculators raised their bullish positions on COMEX gold and silver contracts in the week to February 18, data showed on Friday.

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