ANALYSTS at major bullion banks are cutting their gold price forecasts for 2013 and beyond following the 10% crash which hit the market mid-month.
Despite a dramatic surge in physical bar, coin and bullion demand from private investors in Europe, North America, the Middle East and across Asia, "It is by far not enough to counterbalance the speculatively aggravated movements of past days," write Sonia Hellwig and Florian Richardt in Hanau, Germany for global refining group Heraeus.
Yesterday Joni Teves, precious metals analyst at Swiss bank UBS, cut the bullion dealer's one-month gold price forecast by $300 per ounce to $1425 – just above current levels.
UBS's three-month gold price forecast is now at $1500 per ounce, down from $1850 previously.
On Friday Canada's RBC bank cut its 2013 gold price forecast down to $1450 from $1700 per ounce. RBC also cut its stock-price targets for major North American gold mining companies by up to 30%.
"In this gold price environment," head of global mining research Stephen Walker told the Globe & Mail, "we expect all gold producers to focus on reducing operating costs and cutting non-essential capital spending, building shareholder confidence in company business models."
London bullion market-maker Barclays meantime cut its 2013 average gold price by 10% to $1483 per ounce. Next year's average price is now pegged at $1450, down from $1600 in Barclays' previous forecast.
"Gold and silver, the front-runners [in commodities] since 2009, are likely over the next few years to be among the weakest of all," said Barclays' note to clients.
"We see the outlook in the near term as fragile," Barclays said.
"I think the most important thing," says fellow bullion-bank HSBC's chief precious metals analyst Jim Steel "is there's been a marked reaction by consumers and retail investors to the drop in price.
"It's very much at the retail level…literally consumers reacting through coins and small bars. It's really a major driver in us going $100 above the low."
But while private consumers have emptied some gold bar retailers in Europe and forced the US Mint to suspend sales of its smallest American Eagle gold coin, professional money managers trading exchange-traded gold funds have cut their positions dramatically – down 19% since December's peak in holdings for the giant SPDR Gold Trust.
Conducting what it calls "an informal straw poll, using a show of hands of around 40 people," at a professional investors conference in Amsterdam recently, "The vast majority were bearish" on the gold price say analysts from Nomura Bank, "with only a handful unsure about what happens next.
"Just two individuals were bullish."