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Gold: 'It's like summer never happened'

Dario Pignatelli | Bloomberg | Getty Images

Gold has rallied steadily for over a week, as investors bid for safe haven assets, due to fears about the possibility of Western military involvement in Syria. As global stock markets flounder, analysts told CNBC that investors appeared to have dismissed the bullion rout that happened just a few months ago.

The price of gold has shot up over 4 percent in the last week, climbing to $1,427, its highest price since May 15. The precious metal is now up more than 20 percent from the low of $1,180 it hit in late June.

"It's like summer 2013 never happened for gold and silver," said Adrian Ash, head of research at BullionVault.

(Read more: Gartman's trade ofthe moment on the Syrian crisis)

"The dramatic downturn in U.S. data, plus the fresh wrangling over the U.S. debt ceiling, have seen both metals recover all of June's slump. Bullion prices say Fed tapering is off the table for September, and that's before the Syrian crisis puts a real premium on crude oil."

Ash said it was still unclear whether the jump in gold's price marked the beginning of a long-term upward trend, but said the bounce had precedence.

"Since April 1968, there have been 15 rolling three-month periods where gold in sterling has lost 24 percent or more, and after each of these three-month periods, gold prices rose again over the next three months, resulting in an average 20.7 percent increase for U.K. investors," he said.

(Read more: Gold Rout Prompts Shift to Diamond Miners)

As a tangible asset, gold often does well in times of economic and political turmoil. Angelos Damaskos, manager of the Junior Gold fund, said the increase in political risk over the last few weeks has encouraged investors to look to gold as a safe haven.

"Long-term, I think investors will return to the mood of the last 12 years. As stocks have reached all-time highs, companies will fail to deliver promised earnings and dividend growth, which will provide the next catalyst for an upward trend in gold that will go beyond current levels," he said.

However, some analysts saw gold's climb extending beyond the current tension in Syria.

Capital Economics Economist Jessica Hinds said gold's bounce does partly reflect a revival of safe haven demand, but that two other factors could prove more important.

(Read more: Gold climbs to 3-1/2 month high on Syria jitters)

"First, there is growing recognition that monetary conditions in the advanced economies will remain exceptionally loose for an extended period, even after the Fed starts to scale back QE [quantitative easing]. Second, the strong underlying demand for gold from households and central banks in emerging economies should also be supportive," she said.

However, Hinds said she was not "especially optimistic" on the outlook for gold.

"U.S. real yields are still likely to trend higher over the next few years and rising interest rates should increase the opportunity cost of holding gold. Overall though, we still think that after the current bounce, gold prices will trend higher in line with the likely growth in nominal incomes," she said.

By CNBC's Jenny Cosgrave: Follow her on Twitter @jenny_cosgrave

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