HSBC, which had forecasted gold prices would hit $2000 per ounce in the second-half of 2012, is now paring back its forecasts for 2013.
The bank has lowered its gold price forecasts for this year to $1,760 an ounce from $1,850 previously. The bank expects the bullion to remain volatile, and trade within a range of $1,575 to $1,950.
Such a drop in gold might lead some miners to cut back on supplies, but James Steel, chief precious metal analyst at HSBC, told CNBC:"Gold prices would need to drop quite a bit to get any real production cuts.Mining is pretty stable at these prices."
"Platinum has a good picture going forward, based primarily on supply tightness from South Africa."
In spite of the cut in its forecast, the bank expects gold prices to trend higher based on more positive underlying supply/demand fundamentals.
HSBC expects the Indian gold consumption to recover this year based on historical consumption patterns, although it doesn't expect it to come back to the 2011 levels.
Many investors are attracted to gold as an inflation hedge.
"The gold market tends to look beyond headline inflation, to what the reaction of the central banks is going to be. Even though inflation has been rather low for the past couple of years, the gold market went very strong, because it correctly identified that the central banks around the world are going to keep the spigot on," Steel said.
"Even when inflation does begin to rise, if investors sensed there were going to be a steep ratcheting up in the interest rate, that would be the end of the bull market.
HSBC left its 2014 gold price forecast of $1,775 unchanged, introduced a 2015 forecast of $1,675 an ounce, and left its long-term forecast of $1,500 unchanged