SAN FRANCISCO (MarketWatch) — Gold futures on Wednesday dropped almost 2% as Goldman Sachs cut its price forecast on the metal, the dollar strengthened, equities rallied and Federal Reserve officials offered mixed signals on the duration of its bond-buying program.

Adding pressure to prices, Cyprus officials reportedly said they plan to sell some gold reserves to contribute to the country’s bailout.

Gold for June delivery GCM23, sank $27.90, or 1.8%, to settle at $1,558.80 an ounce on the Comex division of the New York Mercantile Exchange. That was the biggest one-day dollar and percentage loss for a most-active contract since November and the lowest closing level since April 4, according to FactSet data.

The precious metal rose Tuesday to settle up $14.20, or 0.9%, at $1,586.70 an ounce — the highest close since April 1, as a weaker dollar and losses in four of the previous five sessions helped lure bargain hunters.

A rush to sell gold in Japan

In a note to investors, Goldman Sachs said it now expects an average price for gold in 2013 of $1,545, down from a prior forecast of $1,610. It was the second cut for their gold forecast in less than two months.

“With our economists expecting few ramifications from Cyprus and that the recent U.S. slowdown will not derail the faster recovery they forecast in 2H13, we believe a sharp rebound in gold prices is unlikely,” they added.

Goldman Sachs “not only advised their followers that they are closing a long-term bullish position, but also recommended initiating a short position,” said Fawad Razaqzada, technical analyst at GFT Markets, in a note.

Deutsche Bank on Tuesday had cut its outlook on gold prices for this year and next, citing growing headwinds from a strengthening dollar, improving U.S. growth and an increasing appetite for equities over commodities.

Meanwhile, to contribute to Cyprus’s bailout, officials there have agreed to sell around 400 million euros ($523 million) in excess gold reserves, Reuters reported, citing a draft assessment of the nation’s financing needs. That would make more gold available in the market.

Also weighing on gold, minutes of the Fed’s last policy meeting on March 20 showed sharp divisions among officials of the central bank about how long it should keep buying bonds. The minutes were released several hours early due to the fact some copies had mistakenly been sent out.

The sharp division among Fed members over the duration of QE is bearish for gold and silver, said Chintan Karnani, an independent bullion analyst based in New Delhi. The division suggests that “either the QE amount will be reduced or QE3 will be withdrawn as early as any time in 2013.”

Goldman Sachs slashes 2013 and 2014 forecasts for gold. AFP/Getty Images

Gold benefits from easy money policies, such as those of the Fed and the Bank of Japan, which has embarked on a massive easing program, as investors seek a hedge against inflation. Any signs that program will slow can put a dent in the precious metal.

Still, there were “no great surprises from the Fed — apart from the timing of the release,” said Ben Traynor, chief economist at BullionVault

“The debate seems to have focused around when the Fed should start slowing its current pace of monthly asset purchases,” he said. “The answer to that will ultimately depend on how robust is the recovery.”

Fed Chairman Ben Bernanke hasn’t indicated he’s ready to slow down bond purchases, particularly after the dismal March U.S. jobs report showing the weaker-than-expected creation of 88,000 new jobs.

A rally in equities on Wednesday that lifted the S&P 500 SPX, -1.54% to a record intraday high, as well as a climb in the dollar DXY, +0.04% , particularly against the Japanese yen USDJPY, -0.32% helped lure investors away from gold too.

In other moves Wednesday, silver for May delivery US:SIK3 fell 23 cents, or 0.8%, to $27.65 an ounce. Prices on Tuesday had gained 2.7% to settle at their highest level since April 1.

May copper HGK23, lost 2 cents, or 0.7%, to $3.42 a pound.

In its Copper Survey 2013 report released Tuesday, Thomson Reuters GFMS estimated that the market registered a surplus of 214,000 metric tons last year and said the inventory build has contributed to the capping of the upside for prices this year to date.

July platinum futures US:PLN3 fell $23.30, or 1.5%, to $1,529.80 an ounce, while palladium for June delivery US:PAM3 declined by $12.15, or 1.7%, to end at $720.85 an ounce.