This has been a terrible year for gold, with the SPDR Gold Trust (NYSEMKT:GLD) and spot gold prices falling by more than 25%. Many gold-mining stocks have suffered even larger declines, as the Market Vectors Gold Miners ETF(NYSEMKT:GDX) lost more than half its value this year. But with gold just barely hanging above the $1,200-per-ounce level, do investors have any reason to hope that the price of gold in 2014 will bounce back after the first losing year for the yellow metal since the turn of the millennium? Let's take a look at some of the factors that caused 2013's declines and see if they're likely to persist into 2014 and beyond.

Image source: Wikimedia Commons.

What will affect the price of gold in 2014?
The biggest factor that could affect the price of gold in 2014 is the policy that the Federal Reserve sets. A big part of the weakness in gold prices in 2013 came from the Fed's moves toward tapering back on its quantitative easing, with even the threat of reduced bond-buying helping to push interest rates substantially higher. Low interest rates have supported gold prices for years, as investors haven't had to give up appreciable income-earning opportunities when they owned gold bullion. Now, though, as the 10-year Treasury yield has pushed back up 3%, gold investors face a rising opportunity cost when they choose to put their money into gold rather than income-producing assets.

Price projections on gold

UBS 2014 estimate


Goldman Sachs 2014 estimate


ANZ 2014 estimate


Morgan Stanley 2014 estimate


Source: Analyst projections.

Largely because of the prospects for reduced Fed intervention, analysts for the most part have become very unenthusiastic about gold's future. UBS, for instance, cut its gold-price forecasts earlier this month, dropping its guess for the price of gold in 2014 from $1,325 per ounce to $1,200, citing reduced interest among investors to buy bullion and an erosion of supporting factors like favorable technical-analysis patterns to keep prices up. UBS sees 2014 simply as the beginning of a long stagnant period for the metal, projecting $1,200 gold prices in 2015, rising to $1,250 in 2016 but falling back to $1,210 in 2017.

Goldman Sachs is even more bearish, arguing late last month that gold would have to fall at least 15% next year. At the time, Goldman's call implied a gold-price level around $1,050, but a 15% drop would push gold down even further based on today's spot prices.

Of course, the bearish view on gold isn't unanimous. Analysts at Australia and New Zealand Banking Group have called for gold prices in 2014 to rise to the $1,450 level, pointing to strong demand in China as potentially soaking up supply at new lower levels. Moreover, a recovery in India could go a long way toward helping support gold prices, even though an Indian government move to limit imports of gold hit gold purchases in the emerging-market nation hard during 2013.

Watch what the big players do
The other potential driver of the price of gold in 2014 will be what gold producers do. So far, decisions to cut back on exploration and production have arguably helped minimize the drop in gold prices, with industry giants Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) among those scaling back their capital expenditures in efforts to cut overall costs. If mothballing projects results in falling supplies of gold, the resulting supply demand imbalance could put a floor under the price of gold in 2014.

On the other hand, gold miners might decide to protect themselves against further gold-price declines by hedging their production forward. Doing so would mark a big reversal from the stance that most miners took during the 2000s, as companies decided one by one to take off long-held production hedges in order to benefit fully from gold's unstoppable upward march. Such a capitulation among miners would be a big psychological hit to the market, but it could also mark a key inflection point from which gold could finally stage a solid recovery.

Stay tuned
One thing to remember is that predictions for the price of gold in 2014 are inherently unreliable. If you look back at predictions this time last year, you'll have a lot of trouble finding many who expected anything close to the huge drop in gold that we saw in 2013. Nevertheless, with the same fundamental factors still working against gold's prospects, it'd likely take an unexpected catastrophic event to drive investors back to gold as a safe haven.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.