Improving global economic health means gold will not be rebounding anytime soon, with prices expected to fall another 13 percent after 2013's crash caught out investors, metals consultancy Thomson Reuters GFMS said in a report on Thursday.

Prices are set to average $1,225 an ounce this year, GFMS said, down from 2013 and close to current spot prices of $1,239.

Signs that the United States' ultra-loose monetary policy — which helped push gold to record highs in 2011 — is being scaled back more quickly than expected could lead the metal to break lower temporarily.

"We take the view that tapering will continue throughout the course of the year, and the global economy will tend to get slightly better," GFMS manager Andrew Leyland said. "There's little reason for the flight to gold you saw at the beginning of the financial crisis to start up again.

"That means that the gold price needs new drivers, which started to kick in last year in the form of physical demand," he said. "The level around $1,200 is where we see a long-term floor come in for gold."

Strong buying of physical gold is likely to kick in if prices slide, GFMS said, keeping the metal pegged above last year's low of $1,180 an ounce.

That would partly offset falling investment and a rise in mine supply to record highs for a fifth straight year, but significant further gains are unlikely.

"On the downside there is probably more risk in the short term that gold prices could go down towards the $1,100 or $1,000 an ounce level," Leyland said.

"We're confident that if it went down there, those levels wouldn't be sustained for a long time, because you would see such a return of physical demand."

Gold prices crashed 28 percent last year as investors sold products like exchange-traded funds, anticipating the Federal Reserve would scale back its bullion-friendly monetary easing measures, and as new import rules in India curbed demand there.

World investment, which accounted for 28 percent of overall demand, fell 11 percent to 1,342 tonnes, its lowest in five years. GFMS said it expects investment to weaken further this year.

"Investors are still favoring equities and yielding asset classes, while sentiment towards gold is still pretty negative," Leyland said. "It's certainly increased among retail investors, but for the institutions, it seems there are better places to put your money."

Last year's price crash triggered a jump in demand for jewelry, coins and bars, particularly in China. GFMS said Chinese jewelry fabrication surged 31 percent to 724 tonnes in 2013, its largest year-on-year tonnage gain since 1992.

China's jewelry buying rose above former number one consumer India's for the first time last year, with Indian jewelry demand totaling 613 tonnes, little changed from 2012.

Overall jewelry demand hit a five-year high of 2,198 tonnes in 2013, driven chiefly by burgeoning demand in the second quarter, when bullion prices crashed by more than $360 an ounce. It is expected to ease this year, however, with GFMS forecasting a 16 percent drop in jewelry fabrication in the first half.

Last year's extremely strong bar investment — up by a third to a record 1,338 tonnes — is also forecast to ease in 2014, with first-half bar demand seen falling 32 percent to 560 tonnes.

Central bank demand, which fell by a third last year to 359 tonnes, is expected to weaken further, although the official sector will remain net buyers in the first half, GFMS said.

Gold mine supply hit a record 2,982 tonnes last year, up 4 percent year-on-year, GFMS said.

The company is expecting a 2 percent rise in mine output in the first half of this year.

More positively for prices, scrap supply, which fell 14 percent last year as lower prices put off buyers, is expected to continue to decline next year, by 5 percent in the first half.