Gold set for biggest annual drop in 30 years Gold slipped back below $1,200 a troy ounce on Monday as investors closed lossmaking positions and continued to fret about the US Federal Reserve's decision to roll back its bond-buying programme. In quiet pre-Christmas trading, bullion fell as much as 0.9 per cent to $1,192.54, leaving the precious metal on course to record its biggest annual drop in more than 30 years. "On the fundamental side, gold is suffering from the fact that global growth seems to be improving in most (although certainly not all) of the world's key economies, lessening the need for investors to seek out its safety," said analysts at INTL FCStone. Gold dropped 3 per cent last week as the Fed judged the US economy strong enough to scale back its bond-buying programme, taking the first step away from a historic era of monetary stimulus. The precious metal hit $1,185 by Friday in the wake of the move and data that showed the US economy had grown at its fastest rate in nearly two years during the third quarter of 2013. Expectations of an end to the US monetary stimulus programme has knocked almost 30 per cent off bullion prices in 2013. Most of the selling has come from western investors in gold-backed exchange traded funds (ETFs). The decline, the first in 13 years, would have been more severe if China had not purchased record amounts of gold. In spite of this year's heavy fall many analysts believe bullion could decline further in 2014. "Our commodities team believes we are still in the throes of a secular downtrend in the gold price, and thus forecast the long-term price of gold at $1,050 for 2016," analysts at Société Générale said. "The three negative factors that we had already been concerned about are still in place: equities still stand at historical relative lows to gold . . . the US economy is in recovery and pushing rates up . . . and inflation is still under control," they added. In the near term, traders and analysts said the focus was on the 2013 low of $1,180. "The risk is that the market tries to test the sturdiness of this important support: our technical strategist notes that a break below would open up the next level of support around $1,155," analysts at UBS wrote in a recent report. But with the market still very short, traders said there could be some position squaring which could prop up the gold price. Data released by the Commodity Futures and Trading Commission on Friday showed short positions in gold had climbed 1.2 per cent in the week to December 17 - just six percentage points short of the record reached in July. Among other precious metals, silver added $0.12 to $19.49 on Monday, while platinum rose $6.10 to $1,332 and palladium improved $1.50 to $697.25.