Often seen as a hedge against inflation, gold traditionally has had an inverse relationship to interest rates. Monetary stimulus of this kind can stoke inflation, according to many experts, and thus the demand for the precious metal usually increases when rates are low.
However, global inflation has been lifeless in recent months and the gold price has suffered. But, this could be about to change.
Christopher Swann, a cross asset strategist at UBS Wealth Management, believes that inflation will outpace only moderate rate rises by the U.S. Federal Reserve next year. He believes that things will get better for gold after some initial weakness in the shorter term.
"We would anticipate that the low price of gold at the moment is going to draw in more buyers from India and China." he said in a client note on Thursday.
He also noted the cost of extracting bullion is reached when it falls to between $1,000 and $1,100 per ounce. Hence, miners would cut back on production and provide an extra floor for the price.
"We would expect the gold price to stabilize in 12 months," he said.