The price of gold hits its lowest price in NZ dollars since November 2009; falls in US dollars accentuated by rise in currency

Analysts seem to be lining up to declare that the gold price is in a new bear trend.

Overnight, the price of gold hit US$1,215 an ounce, although it has settled in now just over US$1,220.

In New Zealand dollars, that has the price settling in at NZ$1,475/oz which is its lowest level since November 2009.

"The wheels seem to be coming off the gold market," said one US broker. 

Separately, UBS has cut its price forecast for 2014 to US$1,200 an ounce from US$1,325.

UBS is reported to have published a reserach note that said the "struggle for gold not only rests with the predominant selling interest among investors currently, but with limited positive catalysts looking forward, gold is unlikely to regain its former appeal."

UBS also said that as downward momentum continues to build for gold, investors could test US$1,050, a level that could be approaching a "decent buying level," but the path would be "very turbulent."

Echoing the negative tone, a London dealer said "The yellow metal is at stake of loosing its grip in the run-up to year-end. Our flow is dominated by sellers across the board. Producers, funds, [high-net worth individuals] and ETFs all are selling gold in anticipation of the Fed tapering as early as December 18."

Other dealers said bullion buying from Asian consumers, the world's biggest market for physical gold, increased after the sharp overnight drop in prices. However, many remained on the sidelines hoping for even lower prices.

Hong Kong-based metals consultancy Precious Metals Insights, told Reuters yesterday that a build-up in gold inventory among Chinese banks is holding back demand.

Last month, the World Gold Council cut its forecast for Indian gold demand to 900 tonnes from the earlier 1,000 tonnes, predicting that the country could also lose its place as the world's biggest consumer of bullion to China.

In terms of investment coin demand, data showed sales of both the American Eagle gold coins and the Perth Mint's November sales of gold bars and coins fell sharply on a year-over-year basis, while the US Mint's American Eagle silver coins fell 27%.

By our count, at least five mainly European bank analysts have released negative views on gold's prospects in the last day or two, including Credit Suisse, Societe Generale, UBS, Barclays, and TD Securities.