Is this the end of a golden age?

After a decade-long bull market, investors appear to have fallen out of love with gold. The dramatic collapse in prices that began on April 12 has certainly undermined confidence in the precious metal and left many wondering whether it could ever be regarded as a safe haven again. In fact, sentiment has been weakening for some time, reflected in the large outflows from gold exchange-traded funds and fading enthusiasm for gold among speculators in the US futures market.

Nonetheless, the trigger for the recent slump appears to have been aggressive selling by a handful of traders, rather than the reversal of the fundamental drivers that have lifted gold prices in the past and may well do so again. Indeed, none of the fundamental explanations being discussed for the slump in gold prices really makes sense. One is the possibility that the troubled eurozone countries will be forced to sell their official reserves of the precious metal.

However, it is not even certain that Cyprus, whose holdings are tiny anyway, will actually sell any gold. What's more, if the crisis in the eurozone does escalate to the point where other, larger countries were desperate enough to consider dipping into their own reserves, demand for safe havens would surely be so strong that there would be plenty of willing buyers for this gold - even at higher prices.