Goldman Sachs cut its 2013 gold forecasts on Wednesday and said gold's current price cycle will likely turn next year as a rise in real interest rates on the back of improved growth offsets any further balance sheet expansion from the Federal Reserve.
Goldman cut its three, six and 12-month forecasts for gold prices - currently near $1,700 an ounce - to $1,825 an ounce, $1,805 an ounce and $1,800 an ounce respectively.
It also introduced a 2014 forecast of $1,750 an ounce, suggesting price growth could tail off.
"Medium term... the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in real rates on better U.S. economic growth," Goldman Sachs said in a report.
"Our expanded modelling suggests that the improving U.S. growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013."
The bank added however, that with risks to its growth outlook still elevated, especially given the uncertainty around the fiscal cliff, calling a price peak was "a difficult exercise".
Gold prices are set for an twelfth year of growth in 2012, with rock-bottom interest rates, concerns over the financial stability of the euro zone and diversification into bullion by central banks all driving gains.
The bank said its forecasts for higher gold prices in recent years had been motivated by ultra-low real interest rates and central bank gold buying, which last year hit its highest since the mid-1960s at 455 tonnes.
However, it said it had since noted that not all announcements of quantitative easing measures, a form of loosening monetary policy, had driven price spikes.
The bank said gold prices reacted less to easing that did not require Fed balance sheet expansion, such as its Operation Twist programme, than to announcements of easing through expanding its balance sheet.
"(Our) forecast for limited upside to gold prices accounts for our economists' expectation for further Fed easing later in 2013, suggesting that an improving U.S. growth outlook more than offsets the potential for further Fed balance sheet expansion," it said.
"Absent additional easing in late 2013, we expect gold prices to decline at a faster pace in 2014 and to reach $1,625 an ounce by year-end," it added.
"Under a weaker U.S. growth outlook, gold prices will likely trend higher, reaching $1,900 an ounce by the end of 2013."
Copyright @ Thomson Reuters 2012