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Goldman Sachs cut its gold price forecasts for a second time in six weeks on Wednesday, citing expectations for an acceleration in U.S. economic growth and the metal's recent lacklustre price performance.
The bank lowered its 2013 average gold price forecast to $1,545 an ounce from $1,610 and its 2014 price view to $1,350 an ounce from $1,490.
It also advised that investors close a long COMEX gold position, recommended in late 2010, and replace it with a short COMEX position.
Goldman had already cut its gold forecasts in late February, reducing its 2013 price view from $1,810 an ounce. Its current forecast amounts to a fall in the average gold price year-on-year for the first time since 2001, when the metal's 12-year bull run began.
"Despite resurgence in euro-area risk aversion and disappointing U.S. economic data, gold prices are unchanged over the past month, highlighting how conviction in holding gold is quickly waning," Goldman said in the note.
"With our economists expecting few ramifications from Cyprus and that the recent U.S. slowdown will not derail the faster recovery they forecast in (the second half of 2013), we believe a sharp rebound in gold prices is unlikely."
It also cut its three, six and 12-month COMEX gold price forecast to $1,530, $1,490 and $1,390 a troy ounce from $1,615, $1,600 and $1,550 a troy ounce, respectively.
Goldman recommended closing the long COMEX gold position that it first initiated on October 11, 2010 for a potential gain of $219 a troy ounce.
"While there are risks for modest near-term upside to gold prices should U.S. growth continue to slow down, we see risks to current prices as increasingly skewed to the downside as we move through 2013," Goldman said.
"In fact, should our expectation for lower gold prices continue to prove correct, the fall in prices could end up being faster and larger than our forecast, as aggregate speculative net long positions across COMEX futures and gold ETFs remain near record highs."
Spot gold was down 0.3 percent at $1,580.71 at 0926 GMT, while U.S. gold futures for June delivery were down 0.4 percent at $1,580.80.