PRECIOUS-Gold inches higher as Fed flags risks from virus outbreak

Sumita Layek

(Updates prices)

* Fed not satisfied with inflation running below 2%

* WHO to decide whether virus constitutes global emergency

* Norilsk Nickel to deliver 3 T of palladium to market

* SPDR Gold holdings rise 0.5% on Wednesday

Jan 30 (Reuters) - Gold prices edged higher on Thursday after the U.S. Federal Reserve Chair's remarks that the new coronavirus outbreak could impact China's economy in the short term boosted the safe-haven metal's appeal.

Spot gold rose 0.1% to $1,577.64 per ounce by 0613 GMT and U.S. gold futures gained 0.5% to $1,577.90.

"The Fed acknowledged the new risk (coronavirus) that has come to the market scenario, and said it didn't see 2% as a ceiling for inflation. In other words, it could continue cutting rates even if inflation remained higher," said Michael McCarthy, chief market strategist at CMC Markets.

Gold gained 0.7% on Wednesday after the U.S. Federal Reserve held interest rates steady and Chair Jerome Powell said the central bank was not satisfied with inflation running below 2% and that it is not a ceiling.

Powell acknowledged the risks of any short-term slowdown in China due to the virus, which has claimed 170 lives so far. The World Health Organisation (WHO) will reconvene on Thursday to decide whether the epidemic constitutes a global emergency.

Among equities, Asian stocks slipped to seven-week lows on worries about the fast-spreading virus.

Limiting gold's advance, the dollar held close to a near two-month high hit on Wednesday, against a basket of currencies.

"At a minimum, gold will remain bid until the Wuhan flu becomes a transitory event. Still, with an array of risks simmering on the back burner, gold should remain in demand for the foreseeable future," Stephen Innes, chief market strategist at AxiCorp, said in a note.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.5% to 903.50 tonnes on Wednesday.

Palladium shed 0.8% to $2,2269.58 an ounce. The autocatalyst metal has gained nearly 18% so far this month, having hit a record high of $2,582.18 on Jan. 20, on supply worries.

Russia's Norilsk Nickel said on Wednesday its Global Palladium Fund would deliver three tonnes of palladium ingots to the market from its current stock to provide a short-term relief to tight supplies.

Silver was up 0.3% at $17.59, while platinum was down 0.8% to $966.51. (Reporting by Sumita Layek in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu)