Beaten-down gold just can't find any love.
The metal bungee jumped Thursday—first to a sharply lower $1,368, then to a higher low in the mid-$1,380s—as the dollar sold off. Gold ended lower for a sixth day, at $1,386.90 an ounce, a decline of $9.30. But it could drop further, according to analysts.
"I'm not seeing any bargain hunters in there right now, and I don't see any reason why we won't test" test the April lows of $1,321, said Kevin Grady, president of Phoenix Futures and Options. "This is a bear market, and normal corrections are commonplace in bear markets," "The fact that gold rallies back $20 off the lows I don't think is signaling anything."
Gold's problems were already piling on when reports came out Wednesday that BlackRock and investor George Soros sold stakes in gold exchange-traded products.
(Read More: Soros Cut Gold ETF Holdings Before Price Crash)
"Investors around the globe can see a strong dollar, less inflation, weaker commodities ... and famous money managers pulling out of the gold market, so the headwinds are up for gold, and today you had margin selling from yesterday's $28 decline," said George Gero, an analyst with RBC.
"Tomorrow we may see some short-covering ... as traders would not want to hold positions over the weekend, fearing the headlines," he added.
(Read More: Gold Demand Slides to 3-Year Low In First Quarter )
Analysts said that though physical demand for gold is still there, the market is being overwhelmed by ETF selling.
The SPDR Gold Trust ETF GLD has had aggregate outflows of $14.5 billion this year, ahd outflows totaled $1.5 billion for the first two weeks of May. according to IndexUniverse. The GLD ETF has lost 17 percent of its value so far this year.
The World Gold Council said Thursday that investors had not bought enough physical gold in the first quarter to offset ETF outflows but that total ETF holdings were higher than first-quarter 2012.
Gero said some of the giant short position in gold is related to ETF redemptions, causing dealers to hedge against gold sales.
Grady said the market is technically oversold but that it doesn't seem to matter much. Gold could find support if it could climb back to $1,404, he said. "Some of the strikes are holding—$1,375 is a very big strike for us," Grady said. "The only thing going for gold is that everyone is short. Any sign of trouble or any sort of bullish news, the rally back would be vicious. Right now I just don't see that on the horizon."
The Indian wedding season is creating demand, he said, but market momentum is negative. It would be a positive for prices if some of the gold mines shut down, he added.
"When you're looking at a higher stock market like this, and gold is depreciating, it's hard for people to say 'I'm going to keep it in gold when the stock market is making all-time high,' " Grady said. "A lot of these fund managers are pinned against the S&P, and each other. Whether they like it or not, they are forced into the equity market, and that's going to feed on itself."
(Read More: Here's Why Gold Won't Fall Through the Floor )
Jim Steel, HSBC chief commodities analyst, said buyers will respond to the low prices. "This is going to bring in physical buying, but it's going to take awhile for the market to recover," he said. "I think the low from April will hold. I don't think we're going to get below that."