LONDON - Gold prices have just fallen for three straight months, a dubious feat last achieved before the market's 12-year bull run, but with last year's positive drivers still simmering the lull could yet prove the basis for another push higher.
Questions over euro zone stability and the sustainability of anaemic US economic growth could help the defensive qualities of the metal return to the fore of investors' minds, while chart analysis of its price also looks supportive.
On the face of it, gold does not look on the cusp of renewed greatness. Prices, currently at $1,660 an ounce, were pinned in April to their narrowest monthly trading range since last June.
Having ended February, March and April in the red, bullion is down more than 4 percent since the end of January, reflecting a slide in coin sales and holdings of the metal via exchange-traded funds (ETFs), a common vehicle for investor interests.
The decline in enthusiasm for gold came as investors took a slightly more stable economic backdrop as a catalyst to increase exposure to arguably more risky investments like stocks.
But such an extended fall is unusual.
Prices have not fallen for three straight months since the period to May 2000, before the start of a rally that took gold from around $250 to nearly $2,000 last year.
Widening the lens to commodities as a whole, the asset class has struggled. The Thomson Reuters-Jefferies CRB index global benchmark hit its lowest level in April since December 2011, with investors awaiting greater clarity on demand from top raw materials consumer China.
Yet some analysts who study past price moves to determine the future direction of trade say gold is still looking poised to reignite a rally that took it to record highs above $1,920 an ounce last year.
"Although gold has been consolidating for months, I don't interpret this as challenging as long as the long-term trend support prevails," Stephanie Aymes, a technical analyst at Societe Generale, said. "The uptrend is still intact in my view."
Such a trend would only be broken, Aymes said, by a monthly close below $1,600 an ounce.
Such optimism contrasts with other global trends.
Demand in the world's biggest bullion buyer India has been slack for much of the year so far and even the arrival last week of Akshaya Tritiya, one of the most auspicious gold-buying days, did not significantly lift sales.
"In terms of what leads this market upwards, one thing you would need to see is a stronger uptick in physical demand in Asia than we have seen so far," Credit Suisse analyst Tom Kendall said. "You would want to see those volumes pick up quite a lot more than they have so far to be confident."
Despite current headwinds, fundamental arguments for another pulse higher remain, reflected in the official or central bank sector with emerging market central banks in place as net buyers of gold.
"The private sector has been cutting back its exposure, while the public sector, the central banks, have been accelerating quite a lot of their purchases," Deutsche Bank analyst Michael Lewis said.
Official sector purchasing has reached 65.2 tonnes so far this year, with Mexico, Russia and Kazakhstan among buyers.
Looking ahead, factors reflecting on weakness in the global economy that drove gold towards $2,000 an ounce last year are bubbling back to the surface.
Further monetary stimulus remains on the cards in the United States, a case bolstered by slower-than-expected growth data last week.
The euro zone debt crisis also shows few signs of resolution. Although the impact of the crisis has been gold-negative so far this year, due to pressures on the euro versus the dollar, a further deterioration could spark more gold buying to protect against wilder fluctuations in the single currency.
"The most likely catalyst for a further surge in the gold price would be the start of a new and much more dangerous phase of the crisis in the euro zone," Capital Economics economist Julian Jessop said in a recent note to clients.
"This scenario might not be unambiguously positive for the precious metal, but the upside pressures would surely dominate."
Until those factors kick in to drive prices higher, rock-bottom interest rates and central bank buying are keeping gold firmly underpinned above $1,650 an ounce.
As for gold's current lull, SocGen's Aymes points out that a similar eight-month consolidation was seen in 2008, and was followed by a move back up through $1,000 an ounce.
That rally led to gold prices rising more than 60 percent in the next two years.