Gold bars are displayed at a bullion house in Mumbai.ARKO DATTA/Reuters
Gold prices are "probably not too far from their cyclical lows," said CIBC World Markets in a commodity update released Thursday.
The Canadian bank forecast gold to be around $1,300 an ounce at the end of 2015.
CIBC recounted factors that have pressured the metal since earlier in the year, including a renewed bid in the U.S. dollar, muted inflationary pressures and market chatter about the U.S. Federal Reserve eventually tightening monetary policy.
Also, a new government has not scaled back restrictions on gold imports into India, as many had hoped would have happened by now.
Gold's roughly one-third pullback from record levels three years ago is in line with past bear markets since 1971, CIBC said.
"Though some near-term downside risk remains, prices are probably not too far from their cyclical lows, having factored in a host of negatives," CIBC said. "ETF (exchange-traded-fund) sales, a key factor in 2013's dive, have slowed dramatically. Though still somewhat above levels prior to the recession, gold's share of total financial assets has also declined appreciably from unusually high levels on heightened
risk aversion during and right after the recession. Those two factors don't suggest an outsized move, and the odds also appear heavily tilted against a substantial run-up in another traditional prop, inflation.
"Several forces could nonetheless serve as the catalyst for a modest relief rally in the yellow metal, looking ahead 12-18 months."
"Relative asset market performance could also lend support, looking ahead," CIBC said. "The S&P 500'sscorching performance siphoned off support from gold in 2013. With softer profit growth restraining stocks and the 'new neutral' capping bond yields below levels in past cycles, investors may not have quite the same incentive to park their funds elsewhere."