After Frothy Decade, Gold Market Gets Back to Basics

Buying for investment powered the metal's 12-year bull run, during which price movements were dictated more by macroeconomic and geopolitical factors than supply and demand drivers.

Since the start of this year, investors have turned away from gold, liquidating holdings of physically-backed exchange-traded gold funds and cutting long positions in U.S. gold futures. But the impact of this on prices has been cushioned by the emergence of another type of buyer.

"If investors are less interested in buying gold, you won't have such a bull market, but it doesn't mean prices won't go anywhere," Bank of America-Merrill Lynch analyst Michael Widmer said.

"It just means that someone else is regaining some clout - jewellery buyers, and traditional physical buyers," he said. "It'll be proper ounces being purchased by emerging markets, genuine offtake of gold that we haven't had in the last ten years."