Following 13 record highs during the past five weeks, the bubble of gold spot prices has lapsed, with the precious metal trading well down on the more than $US1200 achieved 11 days ago.
Signs of a strengthening United States dollar and profit-taking by investors combined to deflate the price on the Comex division of the New York stock exchange, which traded down below $US1140 per oz on Wednesday.
The price has gradually eased back from its spot price peak record of US1201.32 at the beginning of the month, subsequently falling 5% a week ago; its largest daily loss in more than 13 months.
Craigs Investment Partners broker Peter McIntyre said it was not unexpected after a run of 13 record highs in recent weeks, that gold's price should "retrench", given some strengthening in the greenback and profit-takers cashing in.
"Profit-takers have been squaring their books [with gold sales] and the funds have been selling to square off their books for the year-end bottom line," Mr McIntyre said.
In the short term, he predicted, gold could push down as far as $US1000 per ounce, but the "fundamentals" were still in place for it to retrace its recent losses to "test" $US1250 during the next six months.
"The equity markets are running to a bear market beat," he said.
The reason to hold gold remained unchanged; from the centuries-old position of being a safe haven and hedge against threatening inflation concern, to the more recent transference of household debt issues to governments' sovereign debt issues.
Dubai World's announcement late last month it was defaulting on a $US60 billion ($NZ88.3 billion) debt to large a number of banks for six months, boosted gold's price, until more details calmed the markets.
However, Mr McIntyre noted further concerns of sovereign debt have arisen in Greece, where international rating agency Standard & Poor's had downgraded it to a BBB- rating.
Most commodities were closely affected by the US dollar's strength and would always be open to pricing volatility.
