Gold price will drift lower in the second half of 2014, leading to a second yearly drop in the average price after a dizzying decade-long rally, as U.S. monetary policy returns to normal and Asian demand is weak, analysts forecast in a Reuters poll.
The survey of 31 analysts and traders this month returned an average forecast for the third quarter at $1,270 an ounce, down from the average first-half price of $1,290 an ounce. In the last three months of the year, it is seen averaging $1,255.
For the full year, respondents returned an average forecast of $1,277 an ounce, little changed from a forecast in a similar poll conducted in early April.
That will mark a second year in which gold's average price has fallen, following a 15.5 percent retreat in 2013, the first drop in more than a decade. No recovery is seen in 2015, when gold is expected to edge a touch lower to $1,250 an ounce.
The metal rose around 10 percent in the first half, rebalancing after a slide to three-year lows last year. With the impact of the U.S. Federal Reserve's tapering of its extraordinary stimulus measures now broadly priced in, prices are expected to hold within narrow ranges for the remainder of the year.
"We are mildly bullish for gold in general this year, but we feel that many of the gains may already have been made," Mitsui Precious Metals analyst David Jollie said.
"Tapering should be fully priced into the precious metals markets. However, as we come closer to the end of that process, market uncertainty is likely to increase as the Federal Reserve's intentions are less clear."
Gold's performance this year has featured extended periods of rangebound trading, punctuated by brief, sharp moves upwards or downwards within a broader range.
The spread between gold's highs and lows for the year is currently the narrowest since 2005.
Volatility picked up dramatically during the financial crisis that followed the collapse of Lehman Brothers in 2008, as investors bought the metal as a haven from instability in the wider financial markets.
ASIAN DEMAND SOFT
Softer demand for physical gold in the major Asian markets is also preventing a bigger price move, analysts said.
India surprised bullion markets this month by keeping an import duty on gold and silver unchanged at 10 percent in its government budget, a move likely to limit overseas purchases.
"Physical demand in the major consuming Asian region, and particularly India and China,