Gold’s bull run lost steam in 2013 because of persistently low inflation, an improving global economy, surging stock prices and, in December, the Federal Reserve’s announcement of the phase-out of the U.S. monetary stimulus program.
Currently trading at $1,200 a troy ounce, the precious metal’s value fell by more than a quarter this year, and as of Dec. 27 looks certain to record its first price fall in 13 years, according to the Financial Times.
The tumble in the gold price from $1,670 an ounce at the end of 2012 was largely the result of a sell-off by western investors in gold ETFs. Holdings in the 14 biggest funds plummeted by 31% from record levels last year, the FT reported, citing Bloomberg data.
The year-on-year decrease was the first since the funds began trading a decade ago. Assets in the SPDR Gold Trust, the biggest gold fund, dropped to their lowest level in nearly five years.
“Gold bugs” should not expect a fast rebound, the FT said.
Philip Klapwijk, managing director of the Hong Kong consultancy Precious Metals Insights, predicted that gold would trade in a range between $1,050 and $1,400 in 2014, with an average price $1,170 an ounce.