(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 $1,578.95 per ounce by 0338 GMT and U.S. gold futures gained 0.5% to $1,578.90.

“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.

“Lower interest rate environment for longer is good news for gold bulls,” he said.

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

Powell also acknowledged the risks of any short-term slowdown in China due to the virus, which has claimed 170 lives so far and infected more than 7,700 people. The World Health Organisation (WHO) will reconvene on Thursday to decide whether the epidemic constitutes a global emergency.

Among equities, Asian stocks slipped on worries about the fast-spreading virus.

Limiting gold’s advance, the dollar .DXY 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 risk simmering on the backburner, 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.

Elsewhere, palladium shed 0.1% to $2,285.95 an ounce. The autocatalyst metal has gained nearly 18% so far this month, having hit a record peak of $2,582.18 on Jan. 20 on supply deficit woes.

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% to $17.59, while platinum shed 0.2% to $972.71.