The Economist Intelligence Unit will revise its full-year gold price forecast higher following the metal’s strong performance in the first week of 2014, commodities analyst Edward Bell exclusively told FastMarkets.

The spot gold price fell $8.95 or 0.6 percent in early trading on Tuesday to $1,319.10/1,319.90 per ounce, putting it on course for its first down day in eight, but it has rallied strongly so far this year, climbing nearly 13 percent from trough to peak.

“It is going against all the forecasts we had going into the first quarter,” Bell said. “It has caught out most market observers – ourselves included.”

Gold recorded its first annual price decline in 13 years in 2013, averaging $1,411 per ounce, down from $1,669 in 2012. Most analysts believe that 2014 will see another year of average price declines, with those surveyed by the London Bullion Market Association putting it at $1,219.

“We will have to take another look at our price forecast – we were anticipating that it was going to fall to average $1,245 per ounce this year, but we will probably have to revise that up based on what we think the first quarter number is going to be,” Bell said.

His full-year average price forecast will now rise close to $1,260, factoring in the stronger performance so far this year.

“But overall, the macro drivers are still weighted against gold and we still expect a negative average price move over the year,” he added

He attributed the rise since the start of the year to weaker data out of the US, although these were probably affected by the weather and are not indicative of the country’s underlying economic strength, he added.

“If the US economy maintains the trend it had in the final quarter of 2013, then we will see sentiment turn substantially against gold,” he said.

Looking at fundamentals, Bell believe primary supply will decline this year but he rebuffed suggestions that demand could benefit from a possible loosening of anti-import legislation in India ahead of elections.

A change of policy shortly before the election – while seen as a possible vote winner – would carry too much risk because it might have negative currency implications, he said, adding that any change would come after the elections in April and May.

In wider markets, the dollar declined further against the euro, falling to 1.371.

The economic calendar is busy today. China’s Foreign Direct Investment rose 16.1 percent ahead of US data including the Empire State manufacturing index, TIC long-term purchases and the NAHB housing market index.

The rest of the precious metals followed gold lower – silver lost 24 cents or more than one percent to $21.56/21.61 per ounce, palladium dropped $5 to $734/739 and platinum slipped $10 to $1,418/1,428.

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