I said
which is somewhat confused.
What I think is true, is that you can describe a Riemannian metric, and hence "Euclidean gravity", in terms of a connection valued in a compact group. But if you work in space-time, it's a Lorentzian signature, the metric is only "semi-Riemannian", and the connection will now take values in a non-compact group.
Ashtekar's original work indeed used a connection valued in a non-compact group. The interest was that the change of variables put the Hamiltonian constraint into a polynomial form resembling Yang-Mills theory. But having a quantum gauge theory based on a non-compact group is problematic.
Then Barbero argued that the quantum theory could be based on a real-valued (hence compact) SO(3) or SU(2) connection, at the price of the Hamiltonian constraint becoming non-polynomial again. Apparently this became the basis of most work in loop quantum gravity for a while. (
Someone argued that the resulting theory is not actually a gauge theory, but I haven't read that paper.)
Much more recently, Peter Woit has been championing the idea that you could
start with Euclidean quantum fields with an SO(4) local symmetry, factorize the SO(4) into two SU(2) factors, and use one SU(2) for a connection-based quantum gravity, and the other SU(2) for the weak gauge field of the standard model. Calculations in the empirical world of Lorentzian signature space-time would then be obtained as an analytic continuation, but the Euclidean theory would be fundamental. I think. It might be a distraction to mention this, but it's been discussed on some other threads recently.
@PeterDonis asked for references about the Ashtekar variables. I can't say that these are the best introduction, but you could try
Wikipedia,
Scholarpedia, and
Ashtekar's original paper. Sections 3, 3.1 of
Woit's paper may actually be a quick introduction to the ideas.
Returning to the issue of compactness, it now seems as if there are only two leading proposals for how to get general relativity from a compact gauge group. One is just to work in Euclidean signature. The other is Barbero's proposal, which is about selecting a compact subgroup within the non-compact group (apparently, the famous Immirzi parameter of loop quantum gravity specifies which copy of SU(2) inside SL(2,C) one is using?), and it's now unclear to me if it actually works.