Gold plummeted to just below $1,400 an ounce Monday morning, its lowest price since March 2011. Slower than expected first quarter growth in China was the catalyst for today's drop (following a $60 decline last week on reports that Cyprus is planning to sell some of its gold reserves). Gold is now trading 27% below its September 2011 high of $1,920.

“Gold is kind of giving up,” says Michael Haigh, global head of commodities research at Societe Generale. "Gold is a different animal than the rest of the commodities complex, driven primarily by macrodrivers,” and those macro-drivers now are driving gold prices lower.

Haigh says the bull case for gold "doesn’t look like a great idea anymore especially with the dollar strengthening and real interest rates expected to rise” at some point because of extensive quantitative easing. In addition, inflation pressures have yet to emerge and gold didn’t push through $2,000 an ounce as many thought it would and because the macroeconomy looks stronger.

“China doesn’t look like it’s going to have a hard landing," Haigh said ahead of Sunday 7.7% GDP report. "People are fatigued with Europe and the U.S. looks like it’s doing okay.”

In an April 2 report titled "The End of the Gold Era," Societe Generale forecast gold ending the year at $1,375 an ounce. In a note published eight days later Goldman Sachs forecast gold at $1,450 an ounce by year end, but said the decline could be larger.

The Daily Ticker contacted Societe Generale and Goldman Sachs to check if either was updating its year-end price target given today's near $100 drop in gold prices. Haigh at Societe Generale says the bank is not changing its $1,375 year-end forecast but notes that "some gold miners will get into hot water" if prices continue to plummet. Goldman Sachs hasn't responded yet to our request yet.

Whether gold continues to fall and how far will depend in large part on inflation expectations. Haigh says earlier market forecasts for higher gold prices were fed largely by expectations that aggressive central bank quantitative easing (buying assets) would lead to high inflation, but that hasn't happen.

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In the U.S. consumer prices rose 2% on an annualized basis according to the latest available data for February 2013. That’s slightly above the 1.7% rate for all of 2012 but lower than 3% recorded for 2011. Japan recently announced it too would adopt quantitative easing in order to boost growth—and inflation—but Haigh isn't convinced that will boost global inflation.

“If you get renewed quantitative easing globally, then obviously there are inflationary pressures there," Haigh says. "But even with these extensive and extended periods of times of QE we really haven’t seen any inflation surface [but] rather just central bank balance sheets growing."

And in the U.S., he notes, some Fed officials have been pushing for an earlier exit from quantitative easing.

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Even if inflation doesn't rise, there are limits to how far the price of gold—or any commodity—can fall. “Prices can’t continue to fall below the cost of production for an extended periods of time,” says Haigh.

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