- US futures slipped on Monday while gold and silver tumbled after strong jobs data on Friday.
- Gold fell more than 4% before paring its losses as investors bet the Fed would reduce support sooner.
- But elsewhere, oil prices fell as concerns mounted about rising coronavirus cases around the world.
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US stock futures slipped on Monday, while gold and silver tumbled before paring losses, as investors increasingly expect the US Federal Reserve will reduce its support for the economy sooner than previously expected.
The real action was in the gold and silver markets, however, with prices falling sharply in Asian trading.
Spot gold dropped more than 4%, and silver tumbled as much as 7% before both metals started to pare losses. Gold was down 1% to $1,745.90 an ounce in European trading, while silver was 2% lower at $23.84 an ounce.
The unusual selloff appeared to be driven by the stronger-than-expected US jobs figures released on Friday, which showed that nonfarm payrolls climbed by 943,000 in July, well above expectations of around 870,000.
“Robust employment and wage growth are removing the last formal obstacles before the Fed starts cutting back on its asset purchase programme,” said Alex Kuptsikevich, senior market analyst at trading platform FxPro. “Expectations have increased that these first cuts in the [bond-buying] programme could come as soon as September.”
Gold and silver are seen as “safe-haven” investments and appear less attractive to many investors when times are good. And if the Fed cuts back on its support, higher interest rates may cause money to flee towards higher-yielding fixed income investments like bonds.
Analysts suggested the sharp drop was likely exacerbated by stop-loss orders. These orders to sell an asset kick in once its price falls below a certain level. As there were few buyers around during the typically quiet Asian trading session, the selling picked up pace as prices fell.
Oil prices also took a hit, but for the opposite reason: many investors are concerned that the surge in Delta variant coronavirus cases could hit the global economic recovery and cause lower demand for energy.
Elsewhere, the key 10-year US Treasury yield, which moves inversely to price, was roughly flat at 1.287%. The dollar index was also flat at 92.80.
In the crypto markets, bitcoin climbed 1.8% to $44,643. It topped $45,000 on Sunday for the first time since May before slipping back again.