Is gold's bull market over?

He who dares wins, or so the saying goes.

But for those who took a punt on gold, it has certainly proved a bit of a helter-skelter.

After an extraordinary rally which saw gold soar to a fresh all-time high over $1,900 an ounce in September, it quickly plunged 20%.

Julian Jessop, chief UK economist at Capital Economics, said: "The long bull market in gold has undoubtedly stalled in the last three months, with a sharp decline in prices in September, only a partial recovery in October and renewed weakness in November."

Market commentators were torn as to why the price fell so spectacularly in a matter of weeks, with some citing a tumultuous economic environment and others saying it has simply been over-bought and as with each bull market, inevitably reaches a point of resistance.

And while the precious metal staged a semi-rebound into the late $1,700s, it still remains a way off its previous glory.

Late last month, it slipped to a four-week low, prompting analysts at Commerzbank to say: "Since gold has not managed in the past two weeks to keep reliably above the $1,800 threshold, it has been under pressure."

It inevitably begs the question of why gold might suddenly have switched from being a safe haven to behaving like any other riskier asset.

Explaining away the softness in price, Jessop brushes off the assertion that the gold price had formed a bubble which is now in the process of bursting.

"This does not help the debate much, since the lack of an income stream makes it very hard to value gold objectively and therefore identify a potential bubble. Gold has also been much more expensive in the past relative to other assets such as equities and oil, and relative to its own history in real terms."

Rather he believes that the rebound in the dollar has been the major hurdle for gold.

Jessop says gold is best analysed as a currency and says this helps to explain why "the periods of particular weakness in the gold price in September and November coincided with periods where the dollar rebounded across the board".

"The recent weakness of the gold price largely reflects the return of a degree of confidence in the US dollar, which has more than offset persistent worries about the sovereign debt crisis in the eurozone."

But despite its recent weakness, those with a penchant for gold might be relieved to hear that it is likely to gather momentum going forward.

Gold still to glitter

Charles Gibson, analyst at Edison Investment Research, argues that we have definitely not seen the end of the bull-run "as long as real interest rates in the US remain negative, which simultaneously curbs forward hedging by producers, as well as increasing investment demand from entities with dollar assets (e.g. central banks, creditor countries etc)."

Banking giant Goldman Sachs echoes this sentiment: "We expect gold prices to continue to climb given the current low level of US real interest rates. Further, with our US economics team now forecasting slower US economic growth in 2011 and 2012, we expect US real interest rates to remain lower for longer, supporting higher gold prices through 2012.

"Consequently we recommend near-dated consumer hedges in gold through 2012."

It's not just US interest rates that will keep prices buoyant, rather events closer to home could also have a positive effect.

Gibson noted that while the recent pull back was "inevitable" given its powerful rally of late, but "unless something changes fundamentally the short-term pressure will remain upwards. Even in the event of a European depression, gold should hold its value well relative to other assets, while offering insurance against further debasement of fiat currencies."

Jessop also believes that prices will continue to rise through 2012, not as a result of a hedge against inflation but rather as a safe haven.

"We continue to expect gold to outperform major currencies if, or when, the euro breaks apart. This is the basis for our forecast that the price of the precious metal will jump as far as $2,500 by the end of 2013."

Jessop views the break-down of the euro-zone as a very real threat and says that once investors start to focus on this prospect "with all the uncertainty that would bring to the global economy and financial system from the US will not be immune, gold's claim as a safe haven should come to the fore again."

Deutsche Bank expects gold to hit $2,000 an ounce by the third quarter of next year.

"We expect the commitment of the Fed to keep interest rates low, ongoing central bank diversification into gold and tail events such as systemic risk in Europe will sustain strong investor demand for gold. In an environment where real interest rates are negative and the US equity risk premium is high we expect this will sustain strong private and public sector demand for gold.

"We still view an overshooting in the gold price as a high-probability event linked to concerns of a break-up of the euro area."

Looking for the lowdown on gold and other safe-haven investments? Take a look at Interactive Investor's focus on precious metals.