Gold extended gains for a the second straight session on Thursday as worries over Europe and the rising political tension in Egypt spurred demand for haven assets. However, investors are expected to remain on the sidelines due to the U.S. Independence Day holiday.
Investors weighed prospects for increased physical demand against reduced monetary stimulus speculations from the United States Federal Reserve Bank on Thursday, boosting the metal`s prices. Gold gained nearly 2 percent so far this week after posting its biggest quarterly loss on record.
Investors will likely remain cautious ahead of key central bank interest rate decisions later in the day and U.S. jobs data due on Friday.
The Bank of England (BoE) and the European Central Bank (ECB) are set to announce their policy decisions, with analysts expecting them to maintain their policies.
Gold traders will closely watch ECB and BOE where a looser monetary policies would support gold`s rally, as investors fearing higher inflation resulting from such policies resort to bullions as a hedge against inflation.
As of 2:34 ET, gold for immediate delivery edged 0.39 percent or 4.89 points higher to trade at $ 1,254.12 an ounce after opening at $1,252.46, having earlier hit a high of $1,257.78, and a low of $1,251.12.
Gold’s safe-haven appeal was boosted by political turmoil in Portugal, where talks over the government`s future threatened to reignite the Eurozone crisis, while nervousness over the state of Greece`s next tranche of bailout money also caused minor tremors among traders.
Safe-haven buying was also supported by growing unrest in Egypt as rising tensions in the Middle East typically increase gold’s appeal as a safe haven investment. Egypt`s military toppled the country`s first democratically elected president, Mohamed Mursi Wednesday night and reportedly put him under house arrest, in respond to the end of the given 48-hour ultimatum.
Other precious metals were as follows:
- Silver rose 0.07% to trade around $ 19.70
- Platinum gained 0.72% to $ 1,354.85
- Palladium inched 0.02% up to $ 686.10
Data released in the previous session showed U.S. service sector was far from stellar in June, with growth at the slowest pace in more than three years. The Institute for Supply Management`s (ISM) services index fell to 52.2 last month from 53.7 in May, short of economists` forecasts for a gain to 54.
Investors, however, took comfort from the survey`s employment gauge which rose to 54.7 from 50.1 in May. That should further add to optimism about Friday`s U.S. non-farm payrolls report, which is expected to show job gains of 165,000 last month and an unemployment rate of 7.5 percent.
Investors have been taking their cues from U.S. jobs data as they attempt to gauge when the Federal Reserve will begin to slow the pace of its bond buying program this year.
The USDIX dollar index is currently trading around 83.49 after opening at 83.36, having so far hit a high of 83.52 and a low of 83.36.