The precious metal is considered a safe haven for investors, so when market shocks occur its price typically rises.
Values reached record highs of $1,900 during the financial crisis and in 2016 gold surged immediately after the surprise Brexit vote and election of Donald Trump.
But since November prices have steadily fallen to sit around $1,133 - from highs of $1,372 seen in August.
It comes after stock markets and confidence quickly recovered from shock events during the year.
And experts said a similar pattern could emerge next year amid political turmoil in Italy and the looming French and German elections.
Julian Jessop from Capital Economics, predicts that gold demand will be at $1,050 by the end of 2017.
He said: "One lesson from 2016 is that safe-haven demand can be fleeting even in the wake of major political shocks.
"This is something worth bearing in mind if, or when, the euro-zone crisis next flares up."
But he added: "The responses to new shocks in 2017 may not be so benign.
"And it is worth stressing that Brexit has not yet happened and Trump is not yet President, so there is still plenty of time for the shocks of 2016 to bite."
Gold prices could also remain under pressure amid a strengthened dollar, which makes the commodity more expensive for investors.
The US currency surged this year after the US Federal Reserve raised interest rates and forecast as many as four increases in 2017.
Sheridan Admans, investment research manager at The Share Centre, said: “Gold experts have a range of views of where the price of gold might be over the medium term.
"What we can be certain of is in times of market uncertainty gold tends to fair relatively well.
"We also know that gold fairs well when the US dollar weakens.
"Investors should appreciate that gold is a good hedge against inflation, it’s held its pricing power against other asset classes in deflationary environments, and it tends to react positively when emerging economies are growing."
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