The price of gold has increased steadily since the start of the year and the yellow metal remains many wealth managers' favourite hedge against uncertainty in the global economy.

However, some, including investment legend Warren Buffet, do not see the attraction in gold, arguing that it has no intrinsic value and no cash flow. In a recent interview in magazine Fortune, Buffett hit out at gold bulls, warning for a self-inflating bubble.

Meanwhile, Henry Lancaster, senior investment analyst at Coutts, argues that negative real yields undermine currencies and will “drive investors to seek assets that are not directly affected by inflation, depreciation, devaluation or default”.

“While gold is not immune to short-term flows, as we saw late last year, we believe it offers longer-term attractions in the current environment,” Lancaster said. “The squeeze on dollar liquidity and contagion in financial markets from the euro debt crisis in the latter part of 2011 was reflected in a sharp fall.”

Gold began 2011 at $1,400/ounce and climbed above $1,900/ounce in September, before falling to below $1,600/ounce towards the end of the year. The safe haven asset has seen a resurgence at the beginning of 2012 and is currently trading at over $1,700/ounce.

Perhaps unsurprisingly, the World Gold Council said last week that it thinks investors will seek refuge in gold as a result of more quantitative easing announced by the Bank of England: “While a necessary measure in the face of a contracting economy, the Bank of England's latest round of quantitative easing is likely to increase the risk of higher inflation and prompt investors to seek assets, such as gold, which can act as a hedge against rising prices,” said Marcus Grubb, managing director of investment the World Gold Council.

Most analysts and commentator, at central banks and wealth management firms, have suggested that inflation will fall this year across the developed world. Anthony John, chief executive of Fundquest, part of BNP Paribas, has even suggested that deflation might become a bigger worry than inflation in the year ahead.