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Despite a quarterly gain of 5%, gold has recently behaved more like a risk asset than a safe haven as investors liquidated their positions in the precious metal to cover margin claims and losses on other assets.
"The current dynamics of gold resembles its behavior during the last global financial crisis, when the markets were also subjected to serious stress. Given the severity of market turmoil and sharp declines in share prices, the likes of which we haven't seen in decades, it seems that the precious metal has lost a bit of its luster," said analysts at HSBC.
They believe that in the short term, the gold market will be in the stage of consolidation.
"In the near future, it will be possible to observe a pause in the gold market, as the US has adopted a package of assistance to the national economy. No news is expected from Europe yet that could support the precious metal," the bank's representatives said.
"We think that the situation in the US economy will shake the status of the greenback as a defensive asset. This will benefit gold, whose position may become even stronger in this situation. Investors will prefer to buy the yellow precious metal, rather than accumulate US dollars," they added.
"The policy of central banks to provide markets with cheap money and zero interest rates will help to maintain the upward trend in the gold market. In the long term, these factors will remain supportive for the yellow precious metal," HSBC reported.
Credit Suisse experts also remain optimistic about the prospects for gold.
They believe that the precious metal has a good chance to set a new price record, exceeding the previous one at $1,921 per ounce, recorded in September 2011.
"We continue to be very optimistic about the future prospects in the gold market, as the precious metal is trading above the 200-day average mark of its value. Gold confidently maintains the support level of $1,446 - 1,452 per ounce. We expect to reach and overcome the record level of $1,921 per ounce," the experts said.
It should be recalled that during the financial crisis of 2008, the gold market experienced a large-scale sell-off, but when the Federal Reserve intervened, the value of the precious metal began to grow again, until a new price record was set in 2011.
"It is very important to understand that the real yield on financial instruments is no longer growing. We believe that the situation in 2008 should be repeated, that is, after the correction, a long upward trend will begin, which will lead to new gold price records," Credit Suisse strategists noted.
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