Gold has tumbled from record highs as investors, eyeing an end to the coronavirus pandemic, move money to riskier assets.
But while some analysts now believe the rally has peaked, others say prices may still have room to rise, at least for a while.
Gold has traditionally been seen as a safe investment, and investors bought record amounts as the pandemic tore through the global economy.
Those purchases pushed prices from $1,500 an ounce in January to an all-time high of $2,072 in August, and forecasters including Bank of America said it could soon reach $3,000.
But the announcement of several highly effective coronavirus vaccines this month has cemented expectations for an economic rebound, pressuring gold down to $1,800.
"The gold and silver markets are running out of air," said Julius Baer analyst Carsten Menke. "As we expect a continued improvement of the economic environment next year, safe-haven demand should fade."
Investors pulled a record $4 billion from gold funds in the week to Nov. 18, said Bank of America. The bank has abandoned its $3,000 price target.
The change in outlook is shown by gold's value relative to copper, an industrial metal that thrives on economic growth. In April, gold was 11,000 pricier than copper. While still far above its long term average, that ratio has plunged to 8,000.
US 10-year yields have edged higher as investors sell bonds, another 'safe-haven' asset. This can reduce the appeal of gold, as it offers no yield and is more popular when bonds offer no return either.
Even when adjusted for inflation, bond yields are likely to rise further, said analysts at Macquarie, predicting gold at $1,550 an ounce by the end of 2021.
"Gold prices have already peaked," they said in a note.
Even so, many analysts think the rally still has scope to move higher.
Bank of America, while tempering its forecasts, has not turned totally bearish. It still expects prices to rise above $2,000 next year, before falling back to around $1,900-$1,950 through 2022-2025.
Citibank analysts say they expect gold to average $2,100 an ounce next year and $2,200 in 2022.
Central banks are likely to keep interest rates low, capping bond yields, said Saxo Bank analyst Ole Hansen, and have pumped money into the financial system, raising the threat of inflation, against which gold can be a buffer.
"The vaccine can kill the virus, but it can't kill the mountain of debt," he said. He predicts that the dollar will weaken as the global economy improves, making gold cheaper for buyers outside the United States.