The price of gold has reached bubble territory and stands to fall 15 percent by year's end, Societe Generale Head of Commodities Research Michael Haigh said Tuesday on CNBC.
"We've been bearish gold for a couple of months now," he added. "Coincidentally, we put out our longer report today looking at the end of the gold era right before we saw a 1.5 percent selloff."
On "Fast Money," Haigh expanded on his SocGen note, titled, "The End of the Gold Era," and making the case that a perfect storm is brewing for gold.
"We see the trigger for the unfolding coming from the macro side," he said.
"What's considered to be the non-fundamentals for oil and grains and base metals are actually the fundamentals for gold, so the trigger from the gold decline we see is coming from the non-fundamental side, i.e., real interest rates rise, stronger dollar, moderate GDP growth, etc. So it's a macro-driven downdraft that the other elements are going to react to."
Haigh said that as economic data shows improvement, gold as a shelter will suffer.
"With the general economic outlook, rising interest rates are generally supportive of growth. In other words, that these are a reflection of improved activity," he said. "So when we see rising interest rates — I'm not talking about spiking interest rates — this is actually a positive for the economy, as it is for most commodities.
"Gold is the exception."
Haigh looked to historical perspective to support his case.
"When you get rising interest rates, you actually start to see — if you look over the last couple of decades — gold sell off while the rest of the commodity complex actually increased because of increased prosperity in GDP growth."
In his note, Haigh wrote: "Investors have pushed the gold price sharply higher over the past 10 years with the past five-year rally driven by fears that aggressive central bank QE would lead to very high inflation."
But interest rates have remained low, he added, and in such a case, "It seems unlikely that investors would want to add much to their long gold positions in this context."
Haigh also looked to the role of exchange traded funds and hedge funds.
"We've already started to see hedge funds not being shy of taking the short position. Remember, they haven't been net short since 2002. But their short positions have been increasing month after month, and we've seen, relative to the last two or three years, record low net length held by hedge funds," he said. "So this is going to be obviously a very much downward pressure on the market.
"But the ETF community has actually started to unwind over the course of this year. We've seen about a 6 percent outflow from the ETF world, so these are the elements that are really going to drive the market down based on the macro outlook."