Gold retains Wednesday’s gains

Gold remained fairly unchanged during Thursdays slow trading, supported by speculation demand may increase amid Europes debt crisis and political turmoil in Egypt.

Gold for August delivery traded at $1 252.35 per troy ounce at 7:54 GMT, down 30 cents from opening price. The precious metal held range between days high and low at $1 257.15 and $1 250.35 respectively. Gold settled 0.8% higher yesterday and has advanced more than 1.4% so far this week after settling lower for the past two weeks – 4.77% and 6.80% respectively.

After crumbling to $1 180.50 last Friday, the lowest since August 2010, gold advanced this week and settled 0.8% higher on Wednesday as financial problems in the peripheral Eurozone members and political turmoil in Egypt turned investors attention towards the precious metal as a safe haven for wealth preservation. Weakening of the dollar that followed controversial U.S. economic data also supported gold.

Political tension in Italy arose as a coalition partner of Prime Minister Enrico Letta threatened to withdraw support. Portugal’s Finance Minister, Vitor Gaspar, resigned on Monday as data showed the country’s budget deficit widened during the first quarter. The countrys foreign minister also deposited his resignation on Tuesday. Borrowing costs in Spain and Italy surged. Meanwhile, Greece officials announced the country wont be able to meet the “troika”s deadline on public reforming and is hoping for new arrangements.

In Egypt, military forces removed President Mohamed Morsi from power as they sought stability as many protesters lost their life during the turmoil. The country’s constitution was suspended.

Xiang Nan, an analyst at CITIC Securities Futures Co. said for Bloomberg: “Investors were reminded by Egypt and Portugal that there are still many risks to the global economy out there. Investors are waiting for the payrolls number on Friday. Expectations for an improvement in the U.S. economy will put a damper on sentiment.”

Yesterday, controversial U.S. economic data weakened the dollar, thus pushing gold prices up. The greenback tends to trade inversely to dollar-priced commodities as strengthening of the currency reduces raw materials appeal as an alternative investment and makes them more expensive for foreign currency holders. The dollar index fell by 0.45% yesterday after positive employment data, which showed more jobs were added and initial jobless claims fell, was offset by the country’s Trade Account deficit figure that mismatched expectations by almost $5 billion. During May, the U.S. Trade Balance deficit widened to $45.027 billion, well above April’s revised reading of $40.149 billion and expectations for a narrowing to $40.100 billion.

Meanwhile, the ISM Non-Manufacturing Composite also disappointed, marking a lower reading compared to the previous month, while expectations were for an increase. The indicator for June stood at 52.2, well below 53.7 in May and failing to meet projections for a rise to 54.

Controversial economic news failed to support Feds intention to decelerate earlier than expected its Quantitative Easing program, which has been the main cause for the dollar to fluctuate. Investors are now looking ahead into Friday’s key Unemployment Rate and Change in Non-Farm Payrolls indicators, which will provide further information on the pace the U.S. economy is recovering at. Preliminary estimates suggest a 0.1% fall in the Unemployment Rate, 7.5% down from 7.6%. Change in Non-Farm Payrolls are expected to stand at 165 000, down from 175 000 in May. If the positive news are confirmed, Feds view to taper the bond purchasing program will be reinforced, thus pushing gold prices down.

Elsewhere on the precious metals market, silver for September delivery traded at $19.500 an ounce at 8:20 GMT, down $0.258 from its opening prices. The metal ranged between days high at $19.830 and low of $19.455. Platinum September futures stood at $676.90 an ounce, down from opening price at $685.00. Platinum for October delivery traded at $1 343.25 per ounce at 8:23 GMT, below opening price at $1 346.10. Prices ranged between days high and low of $1 362.50 and $1 367.80 respectively.