Gold Prices Retreat Modestly on Profit Taking

Gold prices slipped modestly Thursday as investors booked profits from this week's 3.3 percent rally in the yellow metal.

Some selling reflected a big drop in China's purchasing managers index, its first such drop in three years.

But overall the day's gold price decline came despite positive news on both sides of the Atlantic, which boosted stocks in Europe and the U.S.

Yields on French and Spanish bonds fell during auctions by both countries.

The European Central Bank signaled a readiness to do more to fight Europe's debt crisis if Eurozone leaders agree next week on tighter controls over members' budgets.

European stocks closed sharply higher, with the main German and French stock indexes up more than four percent.

U.S. manufacturing expanded at a faster rate in November and the overall economy grew for the 30^thconsecutive month, according to the Institute for Supply Management. The index rose to 52.7 percent rather than the 52 percent analysts expected.

Construction spending in the U.S. last month also rose, though it remained below year-earlier levels.

U.S. stock indexes were up in late afternoon trading more than three percent.

The dollar was down 0.19 percent against a basket of rival currencies.

Gold for February delivery slipped $10.50 to $1,739.80, while spot gold fell $5.24 to $1,737.09.

Silver for March delivery fell 45 cents to 32.76, while spot silver rose 36 cents to $32.73.