Maybe this central bank will bail out gold

A cyclist rides past the Swiss National Bank's headquarters in Bern, Switzerland.
Gianluca Colla | Bloomberg | Getty Images
A cyclist rides past the Swiss National Bank's headquarters in Bern, Switzerland.

Blame gold's free fall on the Fed, but if a long-shot referendum passes it could be the Swiss National Bank that stops it.

Gold has been dropping as the dollar has been strengthening on better U.S. data and also as the Fed gets closer to the day it will start raising interest rates.

As the precious metal continues to look for a floor, traders are eyeing a Swiss referendum Nov. 30 that could require that country's central bank to hold 20 percent of its foreign exchange reserves in gold. So far, polls show only about 2 in 5 Swiss voters would cast their votes in favor of it, strategists say.

According to Jim Steel, head of commodities strategy at HSBC, the SNB currently holds about 7.8 percent of its reserves in gold and that would require massive purchases. So far it seems unlikely to pass, but if sentiment changes and it looks like it would be approved, gold could quickly gain $50.

"The polls so far indicate it will not pass," he said. "The market has given the impression that it does not believe it would pass." The referendum was proposed by the ultraconservative Swiss People's Party.

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Bart Melek, head of commodities strategy at TD Securities, calculated that if the referendum did pass the SNB would have to buy about 1,800 tons of new gold—or 350 tons a year over the next five years to make up 20 percent of the $541 billion reserves.

"It could certainly act as a stabilizing factor," he said, but added it's unlikely to become law. "There's a pretty large impediment to that becoming legislation. You've got the government against it, the Swiss National Bank against it."

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Another central bank story that is likely to become more real is the speculation that Russia's central bank will have to begin selling gold, he said.

"They are burning through reserves massively, $10 billion a week. Their gold holdings are close to 10 percent and maybe 11 percent. As they burn through reserves, gold becomes a disproportionately large part of reserves," Melek said.

Russia selling gold from its reserves is more likely than a referendum forcing the Swiss National Bank to buy it, he said.

Read MoreCurrency traders eye Swiss referendum

Gold is down 2.5 percent so far this week, and Steel said it appears to be stabilizing. The December futures contract was fluctuating between positive and negative territory just around $1,145 per ounce.