Goldman Sachs lowered its forecasts for gold, the price of which fell 7 percent last week, citing a decline in U.S. interest rates as the U.S. Federal Reserve prepares to scale down its stimulus program.
Goldman Sachs cut its year-end 2013 gold price forecast to $1,300 an ounce from $1,435 and its 2014 year-end price view to $1,050 an ounce from $1,270.
"Importantly, we continue to expect that continued central bank gold buying will not be sufficient to offset this decline in prices," the investment bank said in a note.
"Further, we would expect this decline in prices to coincide with rising jewelry demand, which we view as price responsive and not price setting."
The bank expects improvement in U.S. economic activity later this year and during 2014 will continue to push gold prices lower in medium term.
The latest sell-off in gold, down 24 percent this year, began last week when the Fed held a policy meeting to consider scaling back its $85 billion monthly bond purchases.
Spot gold opened near $1,300 an ounce in Asian trading on Monday and was around $1,284 by 0847 GMT. Last week, the metal recorded its worst weekly performance since September 2011, falling to a near-three year low of $1,268.89.
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