Gold prices are expected to see further selling pressure in the coming months due to heightened expectations over interest rate hike by the US central bank, lacklustre safe-haven demand and turbulence in Chinese markets.
On Monday, the yellow metal prices crashed to a five-year low due to a heavy sell-off witnessed in the gold exchanges in China.
"We think that sentiment towards gold is now excessively negative," said Capital Economics in a note.
A rise in China's gold reserves also did not underpin the gold prices, as the increased amount was far below the market expectations.
"We have been highly negative on gold for the last one year. China's gold reserves were substantially below expectations and the upside of stock markets has taken the attention of investors there away from gold to equities," G Chokkalingam, founder of Equinomics Research & Advisory, told NDTV Profit.
Chokkalingam expects the gold prices to decline further by 10-15% over the next 12 months.
On Friday, China reported that its gold reserves rose to 1,658 tonnes by the end of June, up 57% since April 2009.
Besides, the safe-haven demand of gold remained weak in recent weeks despite increased concerns over debt crisis in Greece and a crash in Chinese equity markets.
Gold prices did not gain much even though there was a significant sell-off in other asset markets before the debt-ridden Greece got bailed out for the third time last week.
The lacklustre performance of the metal during the peak of Greek debt crisis this month had raised concerns over its status as safe-haven.
"Gold has failed to benefit as much as we (and others) had anticipated from safe-haven demand, despite the catalysts of the Greek crisis and China's equity crash," said Capital Economics.
A strengthening dollar in the wake of growing expectations over rate hike by the US Federal Reserve in September is also a big concern for the gold prices in the coming months.
"If gold prices fall below $1,050 (an ounce), then there will be more pressure on gold prices. I won't buy gold right now," said Jamal Mecklai of Mecklai Financial.