Gold effortlessly slid towards $1,220 for one ounce in Europe on Thursday as optimistic commentaries came from the Head of China's national pension fund that lifted the euro, which reduced bullion's appeal as a refuge from flaw in the currency.

The precious metal expanded losses after China's State Administration of Foreign Exchange said in a yearly report that the gold market is very diminutive, illiquid and unstable to be suitable for asset allotment.

Spot gold was offered at $1,220.60 an ounce at 0935 GMT, against $1,230.35 late in New York on Wednesday. U. S. gold futures for August delivery fell by $8.50 to $1,221.40.

The Euro increased after the Head of China's national pension fund, Dai Xianglong, said that the currency would ride out Europe's debt catastrophe.

Weighty losses in the Euro on the flipside of European sovereign liability concerns have raised demand for gold in the current year, as shareholders sought to branch out of the currency, market analysts said. The Euro's brief rebound higher has for the moment restricted this trade.

Oil prices too edged superior, as verification of strong Chinese in general exports in May outdid squatty demand impressions, seen in top the list of customers in the United States.