TD Securities has lowered its outlook on gold prices for 2013 and 2014, citing the impending end of the Federal Reserve's quantitative easing program.
Analysts at the bank now expect gold prices to average at $US1,380 a troy ounce in 2013, down 7% from a previous forecast of $US1,480, according to a report.
In 2014, the bank sees gold averaging at $US1,188 an ounce, down 10% from a prior forecast of $US1,315 an ounce.
The likely tapering off of the Fed's $US85 billion-a-month bond purchasing program, which could lift bond yields, reduce inflation and bolster the US dollar, was a key driver behind the lower price outlook, the report said.
"Higher interest rates and equity market returns tend to increase the opportunity cost of holding gold in terms of these assets, which reduces investment demand and could trigger additional disinvestment," TD Securities said in the report.
Gold prices weathered their worst-ever quarter in the April-to-June period, plunging 23% on escalating fears that the Fed would soon curtail its easy-money policies.
Gold for August delivery, the most active contract, on Monday settled $32, or 2.6%, higher at $US1,255.70 a troy ounce on the Comex division of the New York Mercantile Exchange.