Gold bugs around the world are anxiously following polls in Switzerland, where if a referendum succeeds at the end of the month, could offer some welcome support to the precious metal's struggling price.
On November 30 the European nation will ask voters whether its central bank needs to hold 20 per cent of assets in physical gold. The "Save our Swiss gold" initiative has been driven by the right-wing populist Swiss People's Party, and obtained the 100,000 signatures required for a referendum in early 2013.
If passed, the Swiss National Bank (SNB) would be banned from selling any of its gold, all gold assets will need to be repatriated back to Switzerland and the SNB would need to hold at least 20 per cent of its assets in gold, necessitating a purchase of 1800 tonnes of bullion.
But a poll published on Wednesday tipped the Swiss ballot to fail, sending gold futures into their biggest loss in two weeks.
Opposition to the initiative was placed at 47 per cent, with just 38 per cent in favour and 15 per cent undecided, according to the poll conducted by the Berne-based research institute gfs.bern for the Swiss Public Broadcaster SRF. More than 50 per cent of the votes are required in order to pass the referendum.
Gold was trading just above $US1180 an ounce on Thursday afternoon, after falling 1.2 per cent overnight in New York on the back of the poll. The precious metal is down nearly 15 per cent from this year's March highs of $US1392.33.
"If Switzerland voted yes the biggest impact would be more physical gold buying, and that would see the price pop up quite significantly," said IG analyst Stan Shamu.
"Of course it would be driven as well by optimism that this will encourage more positive price action in the short term. It would definitely be a positive for gold."
The positive, if they reject, is the fact that they [Switzerland] will "remain fairly well diversified, as opposed to piling in one asset, that's a very big positive," said Mr Shamu.
An obvious negative with rejecting would be that they would "remain leveraged to some asset classes that they are not happy with. It works both ways I suppose," he said.
"The referendum just shows there's a bit of a lack of confidence in the global economy and that big nations such as Switzerland are considering increasing their holdings of gold and just losing confidence in most other asset classes."
It was just a week ago that the polls were still fairly close, encouraging analysts to predict a significant spike in the price of gold on November 30, were it to pass.
While the price of gold took a hit after the latest gfs.bern poll, Mr Shamu said plenty of other factors were also at play.
"The fact that inflation is basically not a real concern for most economies globally, that's quite negative for gold I think, because it's generally used as an inflation agent," he said.
"If there are no inflation fears then ultimately there is not as much need to hold gold."
Volatility in gold is expected in the lead up to the November 30 referendum, where a negative outcome could prompt selling $US1180 selling and retest November lows in the $US1130 region, Rickin chief executive Scott Schuberg said.
If the referendum fails as expected analysts predict the outlook for the precious metal to remain fairly bearish.
"There is definitely skepticism around gold, like most other commodities. The chances are we could see further weakness if the Swiss referendum doesn't go through," Mr Shamu said.