About 10% of global gold output being produced at a loss

One in 10 gold mines are now operating at a loss as bullion prices have dropped to the lowest level in five years, marking the worst period of depreciation since 1996, Wood Mackenzie said in a note to investors.

And while gold was moderately higher in early U.S. trading Thursday, on a short-covering, technical rebound, analysts agree the whole industry is on a bit of “a knife-edge.”

James Sutton, a portfolio manager at JPMorgan Chase & Co.’s $2 billion Natural Resources Fund, told Bloomberg Wednesday gold miners are making “very, very small” margins.

Really everybody in the industry needs higher prices. You’re going to see some companies run into trouble,” Sutton said.

However, several market observers are predicting further losses. One of them is chief commodity strategist at investment bank Goldman Sachs, Jeffrey Currie, who has been bearish on gold since 2012.

Currie said Wednesday he believed bullion prices were heading below $1,000 an ounce. He argued that gold is essentially hedge against a debasement in the US dollar and rising inflation. Both these factors have faded and can no longer support the gold price because "the demand to use gold as a diversifying asset against the US dollar becomes less and less important."

In the annual gold forecast survey by the London Bullion Market Association of the 35 analysts polled, five predicted a dip below $1,000 in 2015.

Adam Myers of Credit Agricole was the most bearish with $950 as an average and a low point of $880.

Spot gold was up 0.8% at $1,101.76 an ounce at 9:30am GMT, while U.S. gold futures for August delivery were up $9.20 per ounce at $1,100.80.