(Bloomberg) — Gold extended its slump, and silver tumbled, after a stronger-than-expected U.S. jobs report fueled bets that the Federal Reserve may start paring back its massive monetary stimulus soon.
Spot bullion fell more than 4% and silver slumped as much as 7% after Friday’s employment figures. Dallas Fed President Robert Kaplan said the central bank should start tapering its asset purchases sooner rather than later, and in a gradual manner, fanning expectations that stimulus will be reined in. The dollar held an advance, while yields on 10-year U.S. Treasuries rose on Friday.
Gold is losing ground on investor concern that an improving U.S. economy and rising inflation will spur the Fed to pull back on unprecedented economic support. Low rates help make bullion more competitive against assets that offer yields.
“We saw a stronger jobs number which would maybe imply that there’s further strength to come in inflation if those jobs numbers keep strengthening. Traders are now erring on the side of caution,” said David Lennox, resources analyst at Fat Prophets in Sydney. The stronger dollar “won’t have helped,” he said.
Spot gold traded 2.3% lower at $1,721.72 an ounce by 8:11 a.m. in Singapore after earlier touching its lowest since March. Silver was down 3.1% at $23.5705 an ounce, paring an earlier drop to the lowest since December.
In other markets, palladium added 0.4% and platinum fell 1.9%.
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