FORTUNE –It may not be much longer before the yellow metal says bye-bye to its bull run.
Up until last year, gold prices traded higher for 11 consecutive years. Investors typically buy it for two reasons: Either to guard against uncertain economic times or to hedge against inflation. The precious metal soared in the years following the financial crisis and continued rising as Europe dealt with debt problems. Gold peaked in September 2011, trading at more than $1,900 a troy ounce.
As much of these fears have subsided, prices have steadily fallen. On Tuesday morning in New York, gold traded at $1,592.85 an ounce, only a few percentage points away from a 20% decline, a benchmark that’s generally defined as a bear market.
This decline comes amid signs of a global recovery. In particular, U.S. home prices have steadily risen as the housing market heals. And although critics worry that the Federal Reserve’s promise to buy up hundreds of billions of dollars would cause prices to rise too fast, the central bank has kept inflation under control.
These factors have led investors to take their money out of gold and other safe-haven investments and park them in riskier assets — namely, stocks, which have soared to new records since the start of the year. Last week, the Dow Jones Industrial Average (INDU) pierced through levels last seen in 2007.
As the Financial Times noted, investors have sold gold exchange-traded funds at a record pace. About 106 tonnes of bullion was dumped in February — the biggest monthly sell-off on record. Since January, gold ETF holdings have declined 140 tonnes, after big investors such as billionaire George Soros sold off their gold ETF holdings at the end of last year.
From analysts’ forecasts, this could mark the beginning of the end of gold’s bull run.
“The turn in the gold cycle is likely already underway,” read the title of a Goldman Sachs report released last month. The report predicted prices for the precious metal would decline well into 2014. Analysts lowered their 3-, 6- and 12- month gold price to a respective $1,615, $1,600 and $1,550 an ounce from $1,825, $1,805 and $1,800. For 2013 and 2014, they lowered expectations respectively to $1,600 an ounce and $1,450 from $1,810 an ounce and $1,750.
“In fact, we suspect that if indeed our forecast for further declines in gold prices proves correct, the fall in prices could end up being faster and larger than we expect,” notes Goldman’s report by Damien Courvalin and Jeffrey Currie.
Gold’s decline has been a slow erosion rather than an implosion, says Vendant Mimani, lead portfolio manager at Atyant Capital’s precious metals focused fund. In 2011, when gold approached $1,800 an ounce, Mimani argued gold was overvalued. He thinks its fair value is $1,100 an ounce.
“Over the next few months we’ll see if either the gold bulls or bears are right.”