Gold is in a "bubble" after the best annual run in at least nine decades and will head into a so-called bear market as a stronger U.S. economy helps increase interest rates and cut bullion demand, Societe Generale SA said.

Investors are unlikely to raise gold holdings because inflation has remained low, signs that the economy is improving may spur the Federal Reserve to curb stimulus and the dollar has strengthened, the bank said today in a report. Bullion is down 4.6 percent this year after 12 straight annual gains and would need to drop another 4.8 percent to mark the common definition of a bear market.

Prices fell this year as Fed policy makers debated the pace of asset purchases. Billionaire investor George Soros, who called bullion the "ultimate asset bubble" in 2010, cut his stake in the biggest gold exchange-traded product by 55 percent in the fourth quarter. Goldman Sachs Group Inc. said in February that bullion's cycle has probably turned as the U.S. economy recovers and Credit Suisse Group AG has said the metal is unlikely to return to the 2011 record of $1,921.15 an ounce.

"The gold price is, in our view, in bubble territory," Societe Generale analysts including London-based Robin Bhar wrote in the report. "Rising interest rates, driven in part by a positive view of the U.S. economy with an associated improvement in the dollar, could be the perfect storm to start a longer-term bear market."

David Fuller's view Gold has certainly lost its uptrend consistency characteristics (historic arithmetic, historic semi-log, weekly & daily) as you can best see from the two long-term charts. Moreover, it is testing its range lows dating back to October 2011, and it has been in an orderly step sequence downtrend since bullion last tested lateral resistance near $1800 in October 2012.

Although gold has yet to break beneath its range lows, there is little else to comfort gold bulls within a medium-term downtrend. They will be assessing the sustainability of progressively lower support levels, until gold either clearly accelerates downwards in a potential Type-1 trend ending (as taught at The Chart Seminar), or breaks its current step sequence downward trend.

What interests me most about the charts above is the comparatively orderly nature of gold's advance shown on the historic semi-log graph, relative to the mania in the late 1970s. This can also be seen in the historic Dow/Gold Ratio, which shows the DJIA divided by the price of gold. It fell to a low of 1.32 in 1980, compared to 5.84 in August 2011, before the DJIA experienced its best rally against gold since the peak in 1999.

One can hypothesise as to the contributing factors but my hunch is that gold will see a considerably smaller percentage retracement of its bull trend which peaked 2011, than occurred in the 1980s. Moreover, I would not rule out the possibility that gold regroups to retest or exceed its highs in the next few years, provided that interest rates do not rise too far.