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By Geoffrey Smith

Investing.com — Gold prices touched $1,600 an ounce on Tuesday for the first time since the scare over a conflict between the U.S. and Iran at the start of the year, after a warning from Apple (NASDAQ:) about a hit to sales revived fears of a global economic slowdown due to the Covid-19 outbreak.

Apple had warned of a twofold hit to iPhone sales, with depressed footfall in its Chinese stores compounded by production constraints in its supply chain. The warning fleshed out anecdotal reports that the Chinese economy is still only functioning at around half of capacity owing to extensive restrictions on people returning to work after the Lunar New Year holidays.

By 10:30 AM ET (1530 GMT), for delivery on the Comex exchange were up 0.9% at $1,600.05, while was up 1.0% at $1,597.39.

Trading appeared dominated by demand for uncorrelated assets after the Apple news sparked a selloff in global stocks and in commodities such as oil and base metals. , nickel and zinc futures all fell more than 1%. Cryptocurrencies also traded mostly higher.

There were also gains in government bonds, with the Treasury yield falling at one point to within three basis points of a record low of 1.95%. By 11:15 AM ET (1615 GMT), it was trading around 2.00%. yields also fell below -0.40% again.

yields fell two basis points to 1.39%, a level that reflects expectations of at least one more interest rate cut from the Federal Reserve. However, there was little sign of that coming in the day’s economic data, which showed the index rising to its highest level since May and the housing market edging down only slightly to 74 from 75 in January.

European data were less encouraging, with the sentiment index falling more than expected, and slowing down – something that keeps the possibility of an interest rate cut at the Bank of England’s next policy meeting alive.

Carsten Mumm, chief economist at German private bank Donner & Reuschel, argued in a morning note that risk assets have become detached from the actual economy, pointing to the increased likelihood of economic contraction in Europe’s largest economy due to the coronavirus.

“The situation in the real economy hasn’t been reflected in prices for a long time, rather, they reflect the general lack of alternatives to low interest rates,” Mumm said.

Elsewhere, rose 2.5% to a three-week high of $18.18, while – another uncorrelated asset – rose 7.8% to another all-time high, stopping just short of the $2,500 level.

That dragged up 2.7% to $993.80, while drifted up 0.3% to $2.61 a pound.

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