But because many investors already held gold, there’s limited scope for new safe haven seekers, subduing the price – and given gold’s glittering run in recent years, many are taking profits from their best performing asset.

Matt Bance, a portfolio manager at T. Rowe Price, said: “Instead, investors have used the volatility to take profits and reduce exposure across previously strong-performing assets.”

Another downward pressure is gold’s relationship with the dollar, which tends to be inversely correlated.

Mr McDermott said: “Gold had done very well while the dollar weakened, particularly again last year, and that trade had continued into the start of this year. But at the start of the conflict, the dollar started to reverse against most currencies.”

Chris Beauchamp, chief UK market analyst at trading platform IG, added: “Gold’s haven status is not all it seems to be. In reality it is dependent on the dollar.

“The dollar’s strength has sucked the life out of the precious metals trade, with the move amplified by a deleveraging of gold positions across the globe.”

Gold also struggles to perform as interest rates rise, as its appeal is crowded out by even safer assets, such as government bonds, which also offer a high yield.

With the potential for an inflationary spiral as a result of the ongoing conflict, traders have begun to price in rates hikes this year, souring gold’s potential.

Will McIntosh Whyte, a fund manager at Rathbones Asset Management, said: “Gold can be a good store of value over the very long term, but it is not the inflation hedge many people think it is, because higher inflation means interest rates are going the wrong way – gold prefers interest rates headed down.”

But Cosmo Sturge, of precious metals-focused manager Baker Steel, said that analysts were often too quick to write off gold.

He believes the current conflict in the Middle East is likely to put the US in an even more difficult financial position – one of the key themes that had pushed up the gold price.

He said: “This will be a temporary headwind for gold. The core reasons for holding gold have been strengthened by this conflict. I think we will see a pretty strong rally for gold and gold miners coming out of this conflict.”

Any canny investors looking to take advantage of this dip should be cautious, however, given that further volatility seems almost inevitable.

Jason Hollands, managing director of Bestinvest, said: “Be very careful about making big changes to portfolios or investment decisions in a situation that is lurching all over the place from day to day.

“The best course of action is inaction – to sit tight and not make hasty decisions based on short-term moves and events, especially in a fast moving and fluid situation.”

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