Has the gold bull run out of steam?

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After rising steadily for more than a decade, gold prices have been knocked off their perch.

Prices plunged to a two-year low last month, prompting investors to dump shares of gold-backed ETFs.

The April sell-off pushed gold into bear market territory, with prices falling 25% from their most recent highs around $1,800 in early October.

Many analysts, including researchers at Goldman Sachs (GS), have been warning that gold's bull run would run out of steam later this year.

While prices have rebounded recently, traders say gold is unlikely to revisit last October's highs.

"I think the trend has changed," said James Cordier, president of Liberty Trading Group. "The days of $1,800 gold are over."

Cordier said many gold investors have been drawn into the stock market as the Dow and S&P 500 hit record highs this year, noting that the gold plunge in April came despite news that normally would have supported gold prices, including continued easing by global central banks.

The S&P 500 is up 13% so far this year, while gold prices have dropped nearly 13%.

Related: Wall Street sours on gold

In a sign of the shifting attitude toward gold, investors last month pulled $6.77 billion out of the largest gold-backed ETF, the SPDR Gold Shares (GLD), according to IndexUniverse.

Investors also bailed on other gold ETFs. Shares of the iShares Gold Trust (IAU) and ProShares Ultra Gold (UGL) have shed between 7% and 14% in the past month.

Gold pops due to weak dollar
Gold pops due to weak dollar

Despite the weakness in gold futures and ETFs, demand for physical gold has been surprisingly robust, said Chris Blasi, president of Neptune Global Holdings, a boutique precious metals firm in Wilmington, Del.

Blasi said many long-term investors, including central banks, still view gold as an important store of value and a hedge against weakness in the U.S. dollar.

"From the traders' perspective, it's going to be difficult to make money in gold for the next few quarters," said Blasi. "But the bull market isn't over."

Still, it's difficult to see what could support gold prices in the near term, said Carlos Sanchez, precious metals analyst at commodities firm CPM Group.

Many of the geopolitical concerns that had driven investors to gold for safety have abated, said Sanchez, pointing to improved market conditions in Europe and modest political progress on the debt problems in the United States.

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In addition, he said inflation remains tame despite easy monetary policies by central banks in developed economies. Investors see gold as a way to protect the value of their assets when overall prices are rising.

"We may have some upside in the near-term, but our view is that the direction for the next quarter or so is more likely lower than higher," said Sanchez.

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