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Gold Bullishness Toned Down In 2013?

“You can see sharp downturns as well as upturns. But it does put in somewhat of a floor because central banks are in there buying,” Kitco quoted him as saying.

Last week's release of the December FOMC minutes suggests that the gold market will remain very focused on monetary policy this year. When it was revealed that some members of the Fed believe that monetary policies should be reeled in during 2013, the yellow metal plummeted, with the downside effects flowing into this week.

Some suggest the price decline was an overreaction.

"While we agree that the Fed will eventually unwind the monetary accommodation, it is too early to react to this possibility given current macro and political developments," said TD Securities, according to Kitco.

Noting that the economic environment is still weak and that the "very challenging negotiations" that remain to be had in Washington could result in spending cuts and thus an underperforming US economy, the firm said "this should reduce the probability that the Fed will tighten sooner, rather than later — reducing yield and lifting gold."

Gold to fall after 2013?

There are others looking for the US economy to improve this year. Among them is Goldman Sachs (NYSE:GS), which lowered its forecasts before the new year. Goldman's three-, six- and 12-month forecasts were reduced to $1,825, $1,805 and $1,800.

It was not these lower prices that created a stir and generated wrath and scrutiny from some market participants, but rather the firm's suggestion that this year could see a top in gold prices. Goldman introduced a $1,750 2014 forecast.

But other firms have made similar calls.

Credit Suisse (NYSE:CS), which had previously projected an average price of $1,840, now projects that the metal averaging $1740. In lowering its 2014 forecast from $1,750 to $1,720, this firm is also projecting that 2013 will be the year that snaps gold's streak of annual increases.

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