Gold will drop in each of the next four quarters and reach a four-year low as reduced US stimulus in response to faster economic growth curbs demand for bullion as a haven, the most accurate forecasters say.

The metal will decline to an average of $1175/oz in the third quarter of next year, or 8.2% less than now, according to the median of estimates from the ten most accurate precious metals analysts tracked by Bloomberg over the past two years. Prices were last at that level in 2010.

The forecasts underscore how some investors lost faith in gold as a store of value, driving prices to their first annual loss in 13 years. More than $63-billion was erased from the value of gold-backed funds this year, spurring losses for billionaire hedge fund manager John Paulson, and mining companies announced at least $26-billion of writedowns.

“Desire to buy gold as a hedge against the con- sequences of monetary policy has diminished,” says Tom Kendall, an analyst at Credit Suisse Group, in London, whose precious metals forecasts were the second most-accurate over the past two years. “When you’ve got other asset classes, equities, in particular, doing so well, then it’s hard to divert investments out of them and into something like gold, which is falling.”

The metal slid 24% to $1 279.43/t in London this year, after tumbling into a bear market in April. It is now 33% below the record $1 921.15/oz set in September 2011. The Standard & Poor’s (S&P) GSCI gauge of 24 commodities has fallen 1.6% since the start of January, the MSCI All-Country World Index of equities advanced 14% and the Bloomberg US Treasury Bond Index lost 2.8%.

Gold retreated this month, even during the partial US government shutdown that started on October 1, the first in 17 years. As US lawmakers last week debated extending an October 17 deadline on the US government’s borrowing authority, bullion still fell the most in a month, reflecting weakening demand for the metal as a hedge against financial turmoil. Congress ended the shutdown and raised the debt limit after Senate leaders had reached a bipartisan agreement last Wednesday.

While the Federal Reserve refrained from trimming stimulus in September, most policymakers said the central bank was likely to taper this year, according to minutes of the meeting released on October 9. US economic growth will accelerate to 2.6% in 2014, from 1.6% this year, according to the mean of 90 economist estimates compiled by Bloomberg.

Bullion will average $1 250/t this quarter, dropping to $1 225/t in the first three months of 2014 and $1 195/t in the following period, the Bloomberg survey showed. The most accurate list includes the top five overall forecasters of precious metals, and the remaining five are made up of the best analysts for gold, silver, platinum and palladium individually.

Jeffrey Currie, Goldman Sachs Group’s head of commodities research, who correctly forecast this year’s rout, said on October 8 that gold was a “slam dunk” sell for next year because the US economy would strengthen after lawmakers resolve the stalemates over the budget and the debt ceiling. Goldman expects prices to be at $1 050/oz at the end of 2014.

Gold rose 70% from December 2008 to June 2011 as the Federal Reserve pumped more than $2-trillion into the financial system, increasing concern about currency debasement and inflation. Consumer price gains averaged 2.2% during the past two years, compared with a ten-year average of 2.4%. The S&P 500 index is trading 1.8% below the record set on September 19.

There are still risks that the global recovery will be weaker than expected, with the Interna- tional Monetary Fund cutting its 2014 growth outlook on October 8 to 3.6% from 3.8%. China will expand 7.4% next year, the least since 1990, and the 17-nation euro area will grow 1%, after contracting since the start of 2012, according to economist estimates compiled by Bloomberg.

Demand for physical gold may also curb the decline in prices anticipated in the Bloomberg survey. The metal jumped as much as 21% in two months, after reaching a 34-month low of $1 180.50/oz on June 28 as Asian demand for jewellery, bars and coins surged. Global sales of bullion bars and coins gained 78% to a record in the second quarter, according to the London-based World Gold Council (WGC).

“If we saw any big downside moves, then you would get a surge in Chinese buying,” says David Wilson, an analyst at Citigroup, in London. “People are buying gold not just for investment. The jewellery market is growing rapidly and I suspect people will bargain-hunt.”

Consumer purchases will reach as much as 1 000 t in India and China this year, the WGC says. That would exceed China’s record of 778.6 t in 2011 and approach India’s all-time high of 1 006.5 t in 2010.

The flow of metal from West to East led Australia & New Zealand Banking Group, Deutsche Bank and UBS to open vaults in Asia this year. Central banks also are storing more metal, adding 535 t to reserves last year, the most since 1964. They may buy another 350 t in 2013, the WGC predicts.

This is being offset by the sale of bullion from exchange-traded products, with investors selling 725.7 t, valued at $29.9-billion, this year, data compiled by Bloomberg show. ETP assets reached 1 906.2 t on October 15, the lowest since May 2010. Paulson, the biggest investor in the SPDR Gold Trust, the largest gold ETP, cut his stake in the product by 53% in the second quarter, a government filing showed.

Barrick Gold, the biggest producer, said in August it might sell, close or curb output at 12 mines from Peru to Papua New Guinea. The Toronto-based miner announced $8.7-billion of writedowns in the second quarter and cut its dividend by 75%, after prices had plunged. Its shares fell 49% in New York trading this year.

The rout in gold may spur mining companies to resume selling future output to lock in returns, reversing a decade-long trend that added demand as producers closed out positions. Hedging will rise to 35 t in 2014 from 20 tthis year, Barclays predicts.

The industry will “slowly return” to forward sales, Charles Carter, an executive VP at AngloGold Ashanti, said at a conference in Rome on September 30. The Johannesburg-based company is the third-biggest producer.

“A lot of gold has been held for speculative purposes, investment and a store of value, and that’s less of a reason going forward,” says Robin Bhar, an analyst at Societe Generale, in London, and the most accurate precious metals forecaster over the past two years.