The precious metal - a store of value since Biblical times - hasn't been the safe haven that conventional wisdom would dictate but has traded like a risk asset, hammered by a resurgent U.S. dollar and sinking in the downdraft of broader risk aversion.
Bullion has erased the hard-fought gains made this year in a matter of sessions. It tumbled to a four-and-a-half month low on Wednesday to $1,527/ounce. It had hit a record high of $1,920.30/ounce in September last year.
So does this mark the proverbial beginning of the end for bullion?
Not quite yet, argue analysts at ANZ. "Gold is neither currency nor commodity," analysts including ANZ's Senior Commodities Strategist Nick Trevethan wrote in a report earlier this month, but "deserves to be treated as a unique asset class."
The report added, "Gold needs to be seen as a portfolio diversifier and stabilizer. It should not be viewed in the context of simply inflation."
Tom Essaye, President of Kinsale Trading told CNBC Asia’s “Squawk Box” on Thursday, "It (gold) tends to be whatever the market wants it to be at that point in time. For now, the market is treating gold as though it is a risk asset and commodity but if things get bad enough, it will become that store value, that emergency store value that it has been historically."
Dominic Schnider, Global Head of Commodity Research at UBS Wealth Management, says that "debt monetization" - or money printing by global central banks to ward off economic instability - would remain a longer-term driver for gold.
He adds that one of the reasons why investors were abandoning gold was due to forced selling, or liquidation, to cover losses in other markets. It also signaled some investors were skeptical of another round of quantitative easing from the U.S. Federal Reserve, which could set the conditions for a gold rally. Investors believe "the bar's been set pretty high" for QE3, Schnider said.
Commodity bull Goldman Sachs, however, expect the U.S. central bank to launch a third round of stimulus in June and, on that basis, are maintaining their forecast for a rally in gold this year, saying that prices will advance to $1,840/ounce over the next six months.
Still, the short-term view on gold, Schnider told CNBC’s “Cash Flow” Thursday was “quite bleak … we see more downside risk … another 10 percent correction is easily on the cards."
-By CNBC's Sri Jegarajah