NEW YORK (Dow Jones)--Gold futures are lower Thursday as investors move away from its perceived safe-haven value while optimism about an economic recovery gains.
Comments from Chinese regulators that the gold market isn't an attractive place for the nation to diversify its foreign exchange holdings are also pressuring the metal.
Most actively traded gold, for August delivery, was recently down $5.80, or 0.5%, at $1,224.10 an ounce on the Comex division of the New York Mercantile Exchange.
Prices of another traditional safe haven, U.S. Treasurys, were also down after the Labor Department said Thursday that initial claims for jobless benefits fell by 3,000 to 456,000 the week ended June 5, in line with economists' expectations. Total claims lasting more than one week, meanwhile, fell to their lowest level since Dec. 13, 2008.
The declines in the gold market come after similar selling Wednesday as a report on Chinese export gains and positive comments from the U.S. Federal Reserve chief eased some of the fear that only one session before had sent the metal to record highs.
Gold has been supported to such levels because of fears of an economic slowdown tied to debt problems in some European countries, particularly Greece, Spain, Portugal.
"Following yesterday's positive comments by [Fed Chairman Ben] Bernanke on the U.S. economy, profit-taking in gold continues apace," said Standard Bank analyst Walter de Wet.
The gold market is also under pressure after Chinese regulators questioned its suitability for foreign exchange holdings, said Suki Cooper, precious-metals analyst at Barclays Capital in London.
China's State Administration of Foreign Exchange, the regulator which oversees the nation's nearly $2.5 trillion foreign exchange stockpile, said Thursday that the gold market is too small, illiquid and volatile to be considered suitable for asset allocation, according to a Reuters report.
Gold bulls sometimes cite the belief that China may seek to diversify some foreign exchange holdings from U.S. dollars into gold.
-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com
