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New York - Gold's rout may be far from over, with many analysts and traders surveyed by Reuters predicting prices could fall to $1 000 per ounce by the end of the year, the first time at that level since 2009, even after Friday's 3% short-covering rally.
A rush of physical buying in the past week - from jewellery in Shanghai to coins in Germany - may prove to be a dead-cat bounce that is too feeble to offset a broader trend of selling by investors betting on further gains in the dollar, US equities and an improving US economy, according to the survey of more than two dozen analysts and traders.
Half of the 27 respondents surveyed on Wednesday and Thursday predicted gold prices will breach a critical support at $1 100 per ounce by the end of this year.
A significant portion even had $1 000 in their sights, which would be a five-year low and a level considered critical for miners. Only two saw prices recovering above the $1 200-mark.
Silver's fortunes may be even bleaker - most of those polled expect prices to fall another 10% to as low as $14 per ounce, which would be its lowest in over five years.
"US dollar strength should impact gold on a short-term basis," said John Meyer, analyst at brokerage SP Angel.
The survey was carried out before spot gold rallied on Friday after hitting fresh 4½-year lows around $1 130 an ounce as investors covered bearish bets after weaker-than-expected October US jobs growth.
Prices may remain volatile and prone to rallies on spurts of short-covering, and weak prices have unleashed a flurry of physical demand for coins in Europe and the United States.
But with the dollar on a tear against global currencies and institutional cash being pulled from the market, any recovery may be short-lived for now.
"The drivers of a sustained rally in gold are ephemeral at best," said Tai Wong, director, metals trading at BMO Capital Markets in New York.
A strong dollar makes it more expensive for foreign buyers to own dollar-based gold.
Holdings in the world's number one gold-backed exchange traded fund, SPDR Gold Trust, which proved popular with investors during the financial crisis that followed the collapse of Lehman Brothers, sank to their lowest in six years on Friday.
The poll highlighted how far gold has fallen out of favour with the end of the Federal Reserve's years-long bond-buying stimulus program.
At $1 000, gold would be off almost 50 percent from the all-time highs of $1 920 an ounce hit in 2011 when investors were piling in to protect against inflation and geopolitical and economic uncertainty.
"The mood of investors could not be more bearish for precious metals," said Thorsten Proettel, commodity analyst at LBBW.
