Hello and thank you for your question.
"Chanel was illegitimate, one of probably six children, although her
parents married in 1885. She later surrounded her early life in
romantic inventions, but the facts seem to be that her father was a
wastrel and a vagabond, her mother died in 1895, and Gabrielle and a
sister were then abandoned in an orphanage until adulthood, while two
of the brothers were sent as foster children to a peasant farmer as
Hospice Children, similar to the Verdingkinder of Switzerland."
Based on the following book excerpts (courtesy of Amazon's
look-inside-the-book), it seems Chanel was somewhat anti-semitic, and
certainly she was not Jewish:
"The Occupation laws offered Chanel a chance to dissolve the
partnership she had loathed for more than ten years. She was Aryan;
the Wertheimers were not."
"Robert Badinter ... got on well with Chanel. Chanel told him plainly
that she had no objection to his being Jewish. He was a calming
influence, alleviating whatever riled her, he made sure she was
Chanel: A Woman of Her Own
by Axel Madsen
Google Answers Researcher