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True Floor for Gold? How About $1,200?

As gold surged again on Thursday, for an 11 percent rally back from bullion's April 16 low, some traders began to think that the precious metal had found a floor.

But Michael Haigh, head of Commodities Research for Société Générale, believes the bottom is still far beneath us—all the way down at $1,200 an ounce.

"The big support on the downside is in the $1,200 handle, which is really the cost of production for the highest producers, which are the South African producers," Haigh told Jackie DeAngelis on CNBC's "Futures Now."

In other words, Haigh believes that once gold drops to about $1,200, South African miners will no longer be able to profit from searching for and mining more of it—which should curtail supply, causing the price of gold to rise. For that reason, $1,200 "is the level you should really be talking about from and economic standpoint, not the $1,400 level" that some traders cite.

Despite the fact that gold has just enjoyed the best two-day gain in over a year, Haigh, who called an end to "the gold era" in an April 2 paper, went on to say that he sees gold ending the year "in the mid- to low-$1,300 level, and falling thereafter."

— By CNBC's Alex Rosenberg

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