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Analysts and traders have slashed their gold price forecasts, with many believing a return to last year’s record highs is unlikely as economic recovery tarnishes the haven metal’s appeal, a Reuters poll showed on Tuesday.

Spot gold has fallen to around US$1,775 an ounce from an all-time high of US$2,072.50 last August, when the COVID-19 pandemic upended economies and forced central banks to pump money into markets and cut interest rates.

Returns on government bonds, an asset class that competes with gold, plunged last year, but U.S. Treasury yields have rebounded, fuelling talk of sooner-than-expected central bank tightening that would hurt bullion.

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The poll of 42 analysts and traders returned a median forecast for gold of US1,784 an ounce for 2021 and US$1,743 for 2022 – sharp downgrades from projections of US$1,925 and US$1,908, respectively, in a similar poll three months ago.

“Most of the drivers [of the rally] are fading,” said Société Générale analyst Florent Pele.

Analysts said, however, that interest in gold could be rekindled by events such as a weakening of the U.S. dollar, an inflation surge, falling stock markets or a wave of coronavirus infections big enough to derail economic growth.

They also said a revival in gold demand in Asia from a slump earlier in the pandemic would prevent prices from falling too far.

The poll forecast silver would average US$25.75 an ounce this year – down from a forecast of US$25.86 in the previous survey – and US$25 for 2022.

Most respondents said silver would outperform gold this year thanks to robust industrial consumption. Large quantities of silver are used in industries such as electronics and solar panels.

“Given silver’s use in renewables ... longer-term investor interest is likely to remain supportive of prices, particularly as industrial demand firms,” said Standard Chartered analyst Suki Cooper.

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