Gold prices continued to slip on Monday after the World Bank (WB) cut its growth outlook on Asia Pacific while stronger than expected U.S. nonfarm payroll report released on Friday raised fears over the longevity of Federal Reserve’s quantitative easing. Silver prices also slipped in early trading on Monday.
Earlier on Friday, gold prices eased after a data provided by the Labor Department showed that the U.S. economy created more jobs than originally anticipated by analysts and the unemployment level fell to 7.8% in September, down from 8.1% in August.
Bullion investors fear that improving job data might prompt to the Fed to conclude its quantitative easing program much earlier than initially thought. Back in September, the Fed had said that it will continue buying bonds worth $40 billion every month until U.S. labor market starts showing marked improvement.
Gold, traditionally considered as a safe haven asset tends to benefit in the environment of easy credit, low interest rates and excessive currency printing since investors seek safety in inflation-hedge assets.
Speaking to Reuters on improving job market in the U.S. and its impact on gold’s prices in the short term, Li Ning, an analyst at Shanghai CIFCO Futures, said, “The good non-farm payrolls number raises doubts on whether QE3 will sustain and puts pressure on gold in the short term.”
Adding to the bullion woes was World Bank’s latest prediction on Asian economies. The World Bank has slashed its forecast on the economic expansion in emerging Asian economies. The Bank said euro zone debt crisis can wipe out more than 2 percentage points of growth in 2013.
Spot gold slipped 0.61% to $1,769.60 and U.S. gold futures for December delivery fell 0.51% to $1,769.50 an ounce.
According to Reuters market analyst Wang Tao, technical chart suggested that gold prices can slip as low as $1,757 an ounce on Monday.
Meanwhile silver Futures plunged 1.96% to $33.895 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 1.82%, the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 3.82%, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) was up 3.71%.
