Gold hits seven year high on rising economic worries, Fed stimulus

Gold prices on Tuesday hit a more than seven-year high on rising fears of a steeper economic downturn and amid massive liquidity measures by global central banks.

Spot gold gained 0.6% to $1,724.72 per ounce by 0804 GMT, having touched its highest since Nov. 2012 at $1,726.85 earlier in the session. US gold futures rose 0.6% to $1,772.20, according to news agency Reuters. 

"The concerns about the economic outlook are particularly supportive for gold. Liquidity (from the Federal Reserve) combined with the background of lower interest rates makes gold a much more attractive proposition," Reuters report said quoting Michael McCarthy, chief strategist at CMC Markets.

Many countries and central banks have taken fiscal and monetary measures to prop up their economies amid the coronavirus outbreak.

The Fed last week announced a $2.3 trillion stimulus package, while European Union finance ministers agreed on half-a-trillion euros worth of economic support.

The Fed stimulus aimed at injecting liquidity into the virus-hit US economy tend to weigh on the dollar, which makes gold relatively cheaper to buy, while lower interest rates reduce the opportunity cost of holding non-yielding bullion.

(With inputs from Reuters)