Daily Gold Update

Source: Marketwatch

New York— Gold retreated on Thursday as the battered euro received a lift from comments by European Central Bank President Jean-Claude Trichet and after China said it didn't consider the metal suitable for asset allocation. Investors also were in more of a mood to embrace risk after U.S. government data showed first-time jobless claims fell by 3,000 to 456,000 in the latest week. The dollar gave ground in foreign-exchange trading as the euro made gains. Gold for August delivery fell $7.70, or 0.6%, to $1,222.20 an ounce on the Comex division of the New York Mercantile Exchange. The contract on Wednesday ended at $1,229.90 an ounce, off 1.3% from the prior day's finish of $1,245.60 an ounce — the highest price since gold futures started trading in the 1970s.

China's State Administration of Foreign Exchange, the regulator that oversees the nation's nearly $2.5 trillion foreign-exchange stockpile, said that the gold market isn't sufficiently large and is too illiquid and volatile to be considered suitable for asset allocation, according to a Reuters report. The ECB's Trichet, meanwhile, said the bank will continue to purchase euro-zone government bonds and will hold off on withdrawing crucial short-term liquidity from the financial system. See full story.