PRECIOUS-Gold jumps 1% as global trajectory dims on virus spread

* Palladium retreats from all-time high of $2,847.50

* Gold could hit $1,700/oz over the next couple weeks- analyst

* GRAPHIC-2020 asset returns: http://tmsnrt.rs/2jvdmXl

* Coronavirus interactive graphic: https://tmsnrt.rs/2GVwIyw

By Harshith Aranya

Feb 27 (Reuters) - Gold prices jumped 1% on Thursday as investors piled into safe-haven assets on mounting worries about how the coronavirus outbreak might hurt the global economy.

Investors fleeing risk dumped U.S. stocks, pushing prices into correction territory, and snapped up U.S. Treasury securities, sending yields to record lows. The flight to safety also boosted spot gold 1% to $1,655.31 per ounce by 10:54 a.m. EST (1554 GMT). U.S. gold futures were up 0.9% at $1,657.50.

"No one knows what the impact (of the coronavirus) will be. It's clearly reducing economic activity in many parts of the world," said Jeffrey Christian, managing partner of CPM Group.

In response, global central banks "will be more inclined to accommodate things with lower interest rates and increase buying of bonds to increase liquidity. They'll do whatever they need to minimize the damage being caused by this."

Money markets are now fully pricing in one 25 basis point cut in the U.S. central bank rate by April and three by March 2021. Other major central banks are also expected to cut rates.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

The yield on the benchmark 10-year U.S. Treasury note reached an all-time low for the third consecutive day.

"What the U.S. Treasury market is telling traders and investors now is that serious economic damage will be inflicted by the coronavirus both at home and abroad, including the possibility of a U.S. recession on the horizon," Kitco Metals senior analyst Jim Wyckoff said in a note.

Wall Street's main indexes also slipped into a correction territory.

"Gold will eye the $1,700 an ounce level over the next couple weeks as the coronavirus outbreak worsens," said Edward Moya, a senior market analyst at broker OANDA.

New coronavirus infections around the world in the past 24 hours surpassed those in mainland China, for the first time. A vaccine may take up to 18 months to develop.

On Thursday, China reported a rise in new virus cases on Feb. 26 from the previous day.

Among other precious metals, palladium retreated from an all-time record peak of $2,847.50 per ounce hit during the session, and was last down 1% to $2,763.01.

Nornickel, the world's largest palladium producer, said it expects a deficit in the global palladium market of 0.9 million ounces in 2020.

Platinum also fell 1% to $901.39, after touching its lowest since December, while silver gained 0.2% to $17.92 an ounce.

(Reporting by Harshith Aranya and Sumita Layek in Bengaluru; Editing by David Gregorio)