Gold dropped to a four-month low of $1,142.92 an ounce Tuesday, and many experts expect the drop to continue amid the dollar's surge and speculation about when the Federal Reserve will begin raising interest rates.
"In this environment, where the U.S. dollar is strong and will probably get stronger with a rise in rates, that won't be good for gold," Daniel Belchers, a commodities-fund manager at Threadneedle Investments, told
The Wall Street Journal.
"If you're looking at U.S. dollar strength, and U.S. economic strength, it's going to be difficult for gold to do anything in that environment."
The precious metal traded at $1,148.60 Wednesday morning and has plummeted 12 percent in the last eight weeks.
As for the dollar, it has reached multi-year highs against a range of currencies in recent weeks. That includes a 12-year peak against the euro this week and a seven-year zenith against the yen last week.
And many experts expect the rally to continue, with the euro falling below $1. It traded at $1.0604 Wednesday morning.
As for the Fed, many economists expect it to start increasing rates in June or July. It has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
When it comes to the economy, analysts surveyed by The Wall Street Journal on average forecast growth of 2.9 percent this year, up from 2.4 percent in 2014.
To be sure, not everyone is bearish on gold. Negative bond yields in Europe will likely push gold up to $1,400 this year, Jeffrey Gundlach, CEO of DoubleLine, said in a webcast last week, according to
CNBC.
Jeffrey Nichols, a senior economic advisor at Rosland Capital, told
CNNMoney he expects volatile movement for gold in the next few months. But ultimately gold should rise, he said.
A growing middle class in China and India, the No. 1 and No. 2 consumers of gold, respectively, will boost demand there, Nichols argued.
"It's only a matter of time before gold turns around," he noted. "Gold should climb to a much higher price over the next three to five years thanks to physical demand from emerging markets."