Gold prices may close the year near $1,300 lifted by a "relief rally" if the U.S. Federal Reserve votes this week to keep stimulus measures intact, CNBC's latest survey of bullion market sentiment shows.
The precious metal, one of the biggest casualties of Fed 'taper' fears, has lost more than a quarter of its value this year – its first annual decline in 13 years as investors increasingly rotate into equities and away from safe-haven bonds and bullion.
"If the Fed defers a taper, we should see gold bounce from oversold levels which could help it test $1,300 again," said Mark O'Byrne, Founder and Executive Director of Dublin-based bullion dealer GoldCore. "We do not believe the Fed will 'taper' as the U.S. economy remains very fragile and any reduction on bond purchases could lead to turbulence in financial markets, a rise in bond yields and affect the wider economy."
(Read more: Gold in 'flux' until taper timeline gets clearer)
CNBC's latest survey of market sentiment showed 52 percent of respondents (14 out of 27) expect prices to decline this week, 26 percent (7 out of 27) say prices will trade at around current levels while 22 percent (6 out of 27) expect price gains.
However, some believe that the Fed may reduce the monthly pace of bond purchases by between $5 billion and $10 billion at its policy-setting this week – Chairman Ben Bernanke's last before his term expires at the end of January 2014 – as recent data suggest that the economy is gaining momentum.
If the Fed does act this week and reduces its massive bond buying program marginally, "gold will likely fall to test strong support at $1,200 again," GoldCore's O'Byrne said.
(Read more: Gold is just the tip of the 'Taper Tantrum')
However, a Fed taper this week remains a minority view though one that has started taking on more prominence as U.S. economic data improves and the risk of a U.S. budget showdown fades after last week's tentative bipartisan agreement.