MAJOR BULLION BANK analysts warned today that professional money managers will need to return to the gold market if the price is to continue its sharp rally from mid-April's crash.

“Physical markets have done their part," says UBS's precious metals team, pointing to Asian household demand, which has leapt so fast on this month's 10% drop in the gold price that dealers are reporting acute shortages.

"It is now up to [Western] investors on how they view the market from here," the bullion bank goes on.

"After all, while physical buying provides a solid floor, investment appetite ultimately holds the firepower to propel prices higher."

UBS's comments come after gold-backed exchange-traded products – a major vehicle for money managers to access the gold price – suffered their worst-ever monthly outflows.

Between them, the two largest gold ETPs available to US money managers – the SPDR Gold Trust and the iShares IAU – shrank 11% by weight in April, losing 158 tonnes of gold bullion.

A separate comment today from analysts at UBS's fellow London market-making bank Barclays notes that the 360 tonnes of gold sold from exchange-traded products so far in 2013 "equates to more than 50% of all the gold mined over the same period."

This extra new supply, however, equals only 15% of all the gold held by ETPs worldwide. "So unless investors regain their faith in gold soon," Barclays concludes, "the prospect is for further heavy outflows to come."

According to specialist website MineWeb, UBS today cut its average 2013 gold price forecast from $1740 to $1600 per ounce, and amended its 2014 target from $1700 to $1625.