According to Thompson Reuters’ latest gold survey, slowing conditions may see gold prices fall further before picking up toward the end of the year.
 
“The fundamentals, pure and simple, point to a trading range of $1200-1300 in the short term,” Reuters said.
 
“There is, however, the distinct possibility of a slump towards $1100, while as the year unfolds, seasonal strengthening physical demand could then propel prices toward $1400 again.
 
“Investor appetite is not strong, however, and without this important element the price is expected to resume a downward course in 2015.”
 
The report showed heavy sales from exchange-traded funds drove a 25% price fall over the second quarter.
 
Exchange-traded fund holdings peaked at 2698t at the start of 2013 and fell by 880t over the year for a net dollar outflow of $40 billion.
 
Gold inventories on the major exchanges also fell 99t.
 
Despite the fall, 2013 saw jewellery demand in Asia and the Middle East jump 21%, with gold bar investment rocketing 43%.
 
“The refineries were working flat out and it is arguable that the only constraint on demand at that time was capacity,” Reuters said.
 
The Middle East and East Asia helped soak up the loss of appetite from western investors last year, leading to an increase in total demand.
 
Worldwide jewellery fabrication, and coin and bar purchases soared 24% over the year to reach a record 4045t, outstripping mine production of 3022t, itself a record.
 
In other areas, scrap supply marked its fourth consecutive annual decline to a five-year low.
 
Total fabrication demand in 2013 came in at 3170t, its highest since 2005 and a 16% gain over 2012.
 
On the supply side, mine production rose 6% and global cash costs were up only $1/oz to $767/oz.
 
Looking forward Reuters said a downward shift in demand and prices would play out through the middle of this year.
 
It said a recovery in the US pointed to equities as a more attractive investment compared to gold.
 
On the upside analysts said a relaxation of import/export rules in India could help boost demand, and there was still the possibility the market could adjust to prices above $1300/oz.