Gold prices seem to have lost their golden touch in September, falling from a high of $1,920 per ounce to $1,650, a drop of 14 percent.

The precious metal may be facing three problems.

One, the Federal Reserve, in a somewhat surprising move, proved gun-shy on Wednesday by not rolling out or hinting at any money-printing measures.

Two, gold – an asset bought with leverage and through financial instruments like ETFs – proved vulnerable to liquidation events, in contrast to true-safe havens like Treasuries, which actually benefit from them. 

Three, long-time gold investor Christoph Eibl of Tiberius Group turned bearish on gold because he claims “the fundamentals of global supply and mining” justify a fair gold price closer to $1,000, reported Reuters. 

Believers of gold, however, are still bullish on the long-term prospects of the yellow metal.

Their main argument is that eventually, economies will deteriorate enough to force central banks around the world to print more money.

“I'm still very bullish on gold...The race to debase one's currency will remain a long term bullish factor for gold as will the Fed's ignorance of their policies impact on the value of the reserve currency of the world,” Peter Boockvar, equity strategist at Miller Tabak, told IBTimes.

Francisco Blanch, head of global commodities research at Bank of America Merrill Lynch, made Boockvar’s gold argument for all commodities.

He believes governments will eventually come out with their “big policy response” to economic deterioration.  When that happens, commodities should do well, he told Bloomberg TV.

Unlike other commodities, however, gold will not be clobbered by weak consumer demand.  Because of its alternative currency status, it should also benefit the most from money printing.   

Perhaps it is because of these advantages – and the daily bearish headlines about the global economy – that allow many gold bugs to remain long-term optimistic in the face of a nasty gold price correction.

E-mail Hao Li at hao.li@ibtimes.com.

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