Gold has struggled over the past two weeks as the US dollar strengthens and the chances of a US interest rate rise in December increases.

The decline of Donald Trump in the US presidential election polls has also removed a perceived catalyst for gold, though Sprott noted overnight that Hillary Clinton’s spending plans were supportive for gold.

The price fell as low as $US1248 an ounce last Friday and is currently at around $1257/oz.

ANZ Research said that with rising inflation expectations, geopolitical issues and signs of improving physical demand, the environment for gold remained positive.

“Higher industrial commodity prices and a reduction in capacity in several industries in China are starting to push producer prices higher,” ANZ said yesterday.

“Break-even rates (a measure of inflation) are also starting to rise in the UK and US, which will increasingly support gold.”

ANZ is tipping the weakness in gold to be short-lived.

“In the short term, the impending rate hike in the US will remain a headwind,” it said.

“However, once passed, we expect prices to continue their drive towards $1375/t in Q1 2017.”

RBC Capital Markets noted that there was no material outflows in total global gold exchange-traded fund holdings last week.

“Global gold ETF holdings actually increased week over week by 450,000oz and now sit at 65.8Moz as of Monday, October 10, with inflows now totalling 18.8Moz year-to-date,” it said.

“However, the COMEX net speculative position declined by 4.3Moz to 27.1Moz last week, which was the second-biggest decline in positioning this year, as investors pared back positions following the drop in gold price.”

RBC said the strength in ETF holdings was supportive for the gold price in the long-term, despite near-term volatility.

Analysts suggested the recent pullback could provide and attractive entry point for investors.

UBS agreed as it maintained its 2017 average gold price forecast of $1400/oz when it updated it metal price outlook this week.

“As long as uncertainty continues to dominate the gold trade, we expect the more liquid gold names to trade in lock step as investors look past fundamentals,” UBS said.

“In our view, gold equities are swinging with the macro outlook for US rate expectations but over the medium to long term, we remain positive on gold equities supported by negative real rates and macro risks.”

Evolution Mining and Alacer Gold are UBS’s preferred gold picks.