Gold prices edged lower on Friday, paring small gains it made yesterday as softer euro and euro zone’s spiraling fiscal crisis curtailed investors’ risk appetite. Silver prices have also edged lower in trading today. Following a series of lackluster data on U.S. economy on Thursday, gold prices gained somewhat its lost ground as investors cut their exposure on dollar and U.S treasuries thereby boosting euro. However, the rebound was short lived as Asian investors started the day nervously with euro zone’s crisis on back of their mind while PMI data from China showed that world’s second largest economy slowed down in May. Commenting over tumultuous global environment and its impact on gold’s prices, Nick Trevethan, senior metals strategist at ANZ in Singapore, said to Reuters, “It's an extension of the fear trade, with big euro zone risk bubbling just below surface and occasionally rising to a popping force, people are just uncomfortable holding risk, even gold. All and all, bears are back in the woods again.� Spot gold dropped almost half a percent at $1,555.46 an ounce by 0325 GMT, after plunging 6.3% in May, the sharpest decline since December. Gold futures were losing 0.72%, at $1552.90, at last check. Meanwhile, ECB President Mario Dragi, on Friday warned that single currency bloc could fall apart without stronger crisis-fighting tools. Investors are now keenly waiting for U.S. non-farms payrolls report for May, which is expected later today. While more gloomy economic data could fuel risk aversion, it could also renew speculation of further monetary easing thereby lending support to bullion, which benefits from a low interest rate environment. Gold rallied almost 15% early during the year when Fed hinted at possible quantitative easing in February even as it decided to hold the interest rate at near zero levels until 2014. Silver futures, at last check were sliding 1.27%, at $27.40 an ounce.

Source