Gold continues declines on U.S. jobs data

Forexpros - Gold prices dropped in Asian trading Monday, extending Friday's declines that came when news broke in the U.S. that January's jobs data came in surprisingly strong, which sent investors racing for stocks and selling the yellow metal.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,734.85 a troy ounce, down 0.31%.     

Gold futures were likely to test support at USD1,726.35 a troy ounce, Friday's low, and resistance at USD1,765.85, Friday's high.

In the U.S. on Friday, the government reported that the economy added a net 243,000 nonfarm payrolls in January, well above market expectations for a gain of around 150,000.

The news sparked a rally in global stock markets, which carried over into Asia on Monday, prompting investors to ditch gold, often the asset class of choice amid economic uncertainty.

Furthermore, the better-than-expected gains in the U.S. labor market fueled expectations that the Federal Reserve was now less likely to inject liquidity into the economy via quantitative easing, a monetary policy designed to avoid deflation and encourage investment, although the dollar weakens as a side effect.

Expectations for quantitative easing often pump up gold prices.

Elsewhere on the Comex, silver for March delivery was down 0.23% and trading at USD33.670 a troy ounce, while copper for March delivery was down 0.65% and trading at USD3.880 a pound.