Somnolent inflation, rising bond yields and a strengthening dollar are the main reasons behind gold's diminishing appeal, experts say.

Gold accelerated its slide last week, sinking to a three-year nadir Thursday after the Federal Reserve decided Wednesday to taper its bond buying.

"The reasons to own gold have just evaporated," Jeffrey Sherman, a commodities portfolio manager at DoubleLine Capital, told The Wall Street Journal.

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"You've had this watershed moment," Sameer Samana, a senior international strategist at Wells Fargo Advisors, told the Journal.

"The economy's starting to firm. Instead of inflation expectations ticking higher and interest rates lower, the opposite is going on. That's really gotten the steam to come out of gold."

February gold futures fell 3.4 percent to $1,193.60 on the Comex Thursday, their lowest settlement since Aug. 3, 2010. The contract regained $10.10 on Friday to settle at $1,203.70.

Spot gold has now plunged nearly 40 percent from its record September 2011 high of $1,921, and the metal is set for its first calendar-year decline since 2000.

To be sure, gold remains a legitimate asset class in the eyes of many investors. But for now, market sentiment is highly bearish for the precious metal.

"If you look at the global economy and the outlook for monetary policy, . . . we are in an environment where we are going to need a much bigger problem in the world than we foresee for gold to recapture any of its luster," Baring Asset Management investment manager Andrew Cole told Reuters.

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