Gold scales 7-year high on rising economic worries, Fed stimulus

Gold rose to a more than 7-year high on Tuesday on rising fears of a steeper economic downturn and amid massive liquidity measures by global central banks.

Spot gold gained 0.4% to $1,721 per ounce by 0243 GMT, having touched its highest since Nov. 2012 at $1,725.10 earlier in the session. U.S. gold futures rose 1.1% to $1,781.20 an ounce.

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's stimulus measures aimed at injecting liquidity into the virus-hit U.S. 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.

Reflecting appetite for bullion, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund (ETF), rose 1.6% to 1,009.70 tons on Monday.