Despite fundamentals that should be contributing to a strong rally, gold is clearly losing steam.
A slow decline that began late last year has snowballed into a full-fledged sell off. On Friday, the yellow metal that has become the darling of the market's inflation hawks tumbled to a six-month low, briefly trading below $1,600. Since the start of 2013, gold has shed four percent – a sharp reversal from a year ago, when it surged by 10 percent over the same period.
Bullion's downturn has left gold bugs scrambling for cover,and grappling for reasons why the metal is falling. Widespread central bank easing has led to a loss of confidence in paper currencies, with the dollar falling to a 15 year low as a reserve currency. (Read More: Is the Dollar Dying? Why US Currency Is in Danger.)
Meanwhile, the U.S. has yet to find a way to extricate the federal budget from a sea of debt and red ink, and the global economy – while recovering– is still not growing at full potential. Central banks are maintaining their foot on the accelerator pedal of more cheap money, leading to fears of a "currency war". (Read More: What Currency War? Move Along, G-20 Leaders Say.)