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Gold Prices Fall on Mixed Central Bank Sentiment

South Korea's central bank cut its benchmark rate to 2.5% from 2.75%, a day after the Reserve Bank of Australia announced a surprise rate cut of its own to 2.75% from 3%. Despite the gold price's heavy tracking of Fed and ECB monetary policy, some analysts believe rate cuts from Australia and South Korea provide some support to the yellow metal.

"It continues a pattern of major central banks deflating their currencies, and that is a bullish underlying factor for gold," Jim Wyckoff, senior metals analyst at, said in an interview. "Even though gold isn't popping on this given day or this given week ... I think going forward in the coming weeks and months it will work to support buying interest."

Outflows from ETFs have continued as gold ETF SPDR Gold Trust (GLD) yesterday experienced about 200,000 ounces of liquidation, according to HSBC's Wen.

Shares of SPDR Gold Trust, the largest trading gold ETF, were ticking lower by 0.13% to $142.27. The ETF is down about 12.2% year to date.

The Bank of England didn't provide any new support to gold prices as the central bank on Thursday maintained its bank rate at 0.5% and the size of its asset purchase program at £375 billion.

Physical demand from China and India have continued to help gold retrace more than half its losses since the April 12 and April 15 collapse. India is the world's largest purchaser of physical gold and will be celebrating Akshaya Tritiya next week. The holiday is the country's second largest gold-buying festival.

Gold mining stocks were mostly higher on Thursday. Shares of Kinross Gold (KGC - Get Report) were adding 4.8%, while shares of NovaGold Resources were climbing 4.5%.

Among volume leaders, Barrick Gold (ABX - Get Report) was up 0.73%.

Gold ETF iShares Gold Trust (IAU) was decreasing 0.12% to $14.29 a share.

-- Written by Joe Deaux in New York.

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GLD $109.14 -0.51%
IAU $11.01 -0.45%
ABX $7.16 -1.10%
KGC $2.13 -1.39%
NG $3.69 -2.12%


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