Gold fell on Thursday, on track for its biggest one-day loss in two weeks, as fearsabout political turmoil in Italy and a deepening euro zone debt crisis prompted investors to raise cash by liquidating some positions in the bullion market.

The precious metal fell for a third consecutive day, as uncertainty lingered even as Italy moved closer to a national unity government, following Greece's lead in seeking a former European Commissioner to pilot painful economic reforms to avert a euro zone bond market meltdown.

Follow-through selling of gold related to margin calls in other markets also weighed, a day after bullion saw small losses while Wall Street tumbled almost 4 percent and the dollar surged, analysts said.

Momentum trading driven by technical triggers since Wednesday morning has driven continued downward pressure on the precious metals, said Miguel Perez-Santalla, vice president at Heraeus Precious Metals Management.

The fact that LCH Clearnet raised margins on the Italian Bonds may have caused liquidation of other assets to meet margin demands, he said.

Spot gold fell 0.8 percent to $1,755.69 an ounce by 11:46 a.m. EDT (1646 GMT).

U.S. gold futures for December delivery were down $35 at $1,756.60 an ounce.

On Wednesday, European clearing house LCH.Clearnet SA increased the margin on debt from Italy at a time when bond yields in the euro zone's third largest economy were close to levels deemed unsustainable.

New York's SPDR Gold Trust , the biggest gold-backed ETF, said its holdings rose 0.24 percent on Wednesday fromTuesday, while that of the largest silver-backed ETF, New York's iShares Silver Trust gained 0.26 percent.