Investors in the UK have turned away from the traditionally “safe” asset class and rallied around sterling-denominated asset classes, according to the Lloyds Bank Private Banking Investor Sentiment Index for August.

Gold appears to have lost its “safe haven” status this month as UK investor sentiment towards the precious metal slid 24 percentage points from July, the largest drop in over two years, according to data from Lloyds Bank Private Banking.

China's unsettled equity market, which saw sharp falls last month, appeared to have taken a toll on the asset class. In terms of the annual change in gold performance, the metal recorded a 16 per cent decline in returns earned.

The findings echo a recent report by the World Gold Council, identifying that global gold demand hit a six-year low in the second quarter of 2015, mainly due to lower demand in India and China.

“While we would expect to see gold do well in times of volatility, investors have generally held their nerve and reached out to other asset classes for returns. In addition, with the price of gold falling to a five-year low last month, the potential long-term outlook for gold is modest,” said Ashish Misra, head of portfolio specialists at Lloyds Bank Private Banking.

“With improvement in net sentiment scores for eurozone shares, we should expect increased interest in the asset class over the coming months as the situation in Greece improves.”

Indeed, sentiment towards eurozone shares saw its first increase in three months, rising 4 percentage points to -44 per cent in August. Meanwhile, all four sterling-denominated asset classes saw a pick-up in investor sentiment, garnering the strongest sentiment across all asset classes. Sentiment towards UK property jumped 7 percentage points to 54 per cent, reversing the eight-point fall seen last month for the asset class, while UK shares reached 37 per cent, UK government bonds 20 per cent and UK corporate bonds 18 per cent.

Japanese shares saw the largest annual growth rate at 30 per cent, largely thanks to the Bank of Japan’s monetary policy support programme. Close behind was UK property at 26 per cent and US shares at 8 per cent. Performance of commodities suffered the most, dropping 44 per cent year-on-year.

The survey, conducted between 3–4 August, took responses from 4,581 adults in the UK, of which 1,249 were investors.