By Diptendu Lahiri
(Reuters) - Gold climbed 1% to a near three-week high on Monday as mounting concerns over the economic fallout of the coronavirus outbreak sent investors scurrying for safe havens.
Spot gold was up 0.6% at $1,579.70 per ounce by 10:29 EDT (1529 GMT). The session high of $1,586.43 was its highest since Jan. 8.
U.S. gold futures rose 0.5% to $1,579.10 per ounce.
"Safe-haven buying has been triggered by this virus in China and we're seeing a big sell-off in equity markets. ... It's mostly panic, the markets are looking at the prospect of the Chinese economy slowing down," said Edward Meir, analyst at ED&F Man Capital Markets.
"We could hit the recent highs above $1,600s if this thing deteriorates."
The death toll from the coronavirus outbreak has risen to 81 in China, with 2,800 confirmed cases, and the virus has spread to more than 10 countries, including the U.S. and France.
U.S. stocks opened more than 1% lower, while U.S. 10-year Treasury yields fell to their lowest in more than three months.
"The main trend (in gold) remains bullish, with the short-term correction seen in the last few weeks seemingly over, increasing the chance of the price achieving a new 7-year-high in the next few weeks," ActivTrades Chief analyst Carlo Alberto De Casa said in a note.
Gold scaled a near 7-year high of $1,610.90 per ounce earlier in the month after an Iranian general was killed in an U.S. airstrike, but the rally was short lived.
Investors will be watching the U.S. Federal Reserve's first policy meeting of this year on Jan. 28-29, where it is widely expected to keep rates unchanged.
In other metals, deficit-hit palladium dropped 4.6% to $2,315 per ounce. At the session low, it was down more than 5%. Platinum fell 1.5% to $986.30.
"Palladium had seen a big run until now, it can't go up forever. Somewhere some correction has to happen," ED&F Man Capital Markets' Meir said.
Silver rose 0.5% to $18.17 per ounce, having earlier touched its highest since Jan. 8 at $18.33.
(Reporting by Diptendu Lahiri in Bengaluru)