By Clara Denina
LONDON (Reuters) - Gold is set to end 2014 just above $1,250 an ounce as an acceleration in U.S. economic growth and strength in the dollar cool the price advance seen in the first quarter, a Reuters survey showed on Tuesday.
The poll of 28 analysts and consultants returned an average gold price forecast of $1,262.50 an ounce for the third quarter and $1,254.20 in the last three months of the year.
For all of 2014 prices are seen averaging $1,278 an ounce, above the $1,235 price expected in a similar January poll.
For 2015, analysts expected gold to stand at $1,250.
After a 28 percent plunge in 2013, ending a 12-year bull run, the market surprised to the upside in the first few months of 2014.
Prices are up nearly 9 percent so far this year, at $1,305, as concern over slowing economic growth and geopolitical tensions spurred demand for the metal as an insurance against risk.
"We believe the rally in the gold price during the first quarter is based on shaky foundations," Deutsche Bank analyst Michael Lewis said.
"We expect gold prices will succumb to positive growth shocks in the U.S. and QE (quantitative easing) tapering since combined these will encourage further advances in U.S. real yields, fresh highs in the S&P500 and a stronger dollar."
Expectations that the Federal Reserve was set to taper its quantitative easing programme - a key driver of higher prices over the last five years - largely drove 2013's losses.
Meanwhile, rallying stock markets last year diverted investment from the metal, causing an exodus from exchange-traded funds. ETFs in 2013 recorded their first annual net outflow - of some 730 tonnes, wiping out 2-1/2 years of inflows.
Holdings have continued to fall this year, despite the price rebound, indicating underlying investor bearishness.
"We are negative for gold because we do not see follow-through buying ... and we are fairly positive when it comes to the global recovery of the economy," said Christoph Eibl, commodity fund manager at Tiberius Asset Management.
"There would be a need for massive buyers of ETFs or physical gold to maintain an equilibrium between demand and supply," he added.
CHINA SUPPORT LACKS
Gold is also seen unlikely to benefit from physical purchases of bars and coins in Asia, where unprecedented buying seen as prices unexpectedly fell in 2013 has calmed down.
According to the World Gold Council (WGC), Chinese gold demand will grow by 25 percent to at least 1,350 tonnes by 2017, though growth in 2014 could be limited after record amounts of buying at 1,132 tonnes last year.
Lower gold prices in 2013 meant some Chinese consumers brought forward jewellery and bar purchases, which may limit demand growth in 2014, the WGC said in a report.
Indian buying is also expected to remain constrained as long as the Indian government maintains the policies it put in place last year to cut imports, which had been a major factor pushing the country's current account deficit to a record level.
Silver should exceed current levels in 2014, with the median forecast returned by analysts polled at $20.40 an ounce, compared to around $20 now.
The metal plunged 36 percent last year, hitting a near three-year low of $18.19 an ounce in June. Silver prices are seen capped by steady supply growth and disappointing industrial offtake, despite resilient investment demand.
In 2015, silver prices should average $20.80 an ounce, outperforming gold.
(Editing by Dale Hudson)
