HSBC Private Bank said it has cooled its enthusiasm for holding gold because its status as a safe-haven asset in times of economic stress is fading fast having already retreated significantly from record highs.

As far as precious metals are concerned, the private banking arm of the UK-listed financial services group said it is moving to a “neutral view”.

A combination of forces have pushed gold prices higher in recent years: lack of supply, strong demand from Asia - a traditionally strong market for gold, a weaker dollar, fears of rising inflationary pressure, and its status as a shelter against economic trouble. Although not all these factors have gone away, some have lost their momentum, such as the dollar's weakening trend. Earlier this year, analysts told WealthBriefing that such commodities were in a bubble and due for a sharp correction.

“Our view centres on gold, we believe its status as a safe haven is being quickly eroded, having declined 16.6 per cent since 15 July 2008 and also showings signs of the exit of speculative long positions,” according to Fredrik Nerbrand, head of global strategy at HSBC Private Bank.

“We believe gold, without the restrictions of the supply/demand constraints that some precious metals have, has formed a speculative bubble which is now deflating,” Mr Nerbrand said.

He points out that historically, speculative bubbles in gold have burst with a decline of 35 per cent on average, suggesting gold could move down to the $630 level from its recent peak of $976.

“It is worth noting that an improving US economy would be negative for gold as investors reallocated assets out of gold and into equities,” Mr Nerbrand said.

Meanwhile, platinum, he said, has surrendered gains in price that had been made due to fears of supply shortages in the first quarter of this year. But fears of falling demand from carmakers and resumption of supplies hit prices.