The gold price drop last week showed its lowest since 2010 and the yellow metal is poised for further fall likely to record biggest monthly drop in the past two years.

The tough time for bulls is expected to continue as the yellow metal might drop below $1,000 after 2009 fall, forecasts from Goldman Sachs Group Inc predicted. Experts attribute to dollar recovery, improving US economy and possible rise in interest rates by US Federal Reserve as factors giving pressure on gold prices. Bulk sales in China also are also adding to the pressure on gold prices.

Futures on Comex dropped 4.1% to $1,086 an ounce and touched 1,073.70, the lowest since February 2010. The gold price is likely to further ease as hedge funds have started covering their net short positions. The all-time high of $1,923.70 was recorded in September 2011.

According to World Gold Council (WGC), the continued recovery in the US economy, strengthening of dollar, expected rise in interest rates, easing demand for gold in China and softening political tensions followed by tentative resolution of a Greek bailout are the major reasons that decreased the demand for gold and pushing the price lower.

In India, the largest gold consuming country, the yellow metal eased to five-year low to below Rs25,000 per 10 gram level. Overtaking China, India emerged as largest importer of gold with 769 tonne in 2014. 

The long holdings declined as speculators turned bearish in New York futures and options. The short positions held by speculators were 11,345 contracts during the week ended 21 July, as per the US Commodity Futures Trading Commission data.

Gold ETFs witnessed $84 billion easing off in funds' value as futures dropped 44% from an all-time high of $1,923.70 in September 2011. 

Adding further to the gold price drop, China has been dumping gold in the international market. Last Monday, China dumped gold worth one-fifth of the whole day's trade and as a result, yellow metal price nosedived 4% within seconds registering a mini flash crash in Asian markets.

ANZ Bank analyst Victor Thianpiriya said in a note that "it was taking advantage of low liquidity or some sort of forced selling had taken place."

Forced selling usually takes place when leveraged investors are left with no option, but to sell gold to payback the borrowed cash that was used to buy the yellow metal.

The steep fall of gold price is impacting yellow metal's production as margins of mining companies are reeling under pressure. Barclays Plc said in its report that "metal has historically traded at least a third above average production cost implying support around $1,000."

Morgan Stanley forecasts that yellow metal could reach $800 under a worst case scenario that would involve "higher US interest rates, another plummet in China's market and sales of reserves by central banks."

Meanwhile, Macquarie Group Ltd lowered its outlook for gold price by 15% to $1,163 by 2016.