While we saw gold exchange traded funds attract robust safe-haven demand over last year, investors now favor the U.S. dollar over bullion as the go-to asset during this bout of eurozone-induced market volatility.
SPDR Gold Shares ETF (GLD) has strengthened somewhat over the past week, but the fund is still down 3% over the past month as the gold spot price dropped down to $1,550 an ounce.
"Gold is correlated negatively in the long run with the U.S. dollar, so if there's a strong dollar you will see a headwind against the gold price," Marcus Grubb, managing director of investment at the World Gold Council, told CNBC. "Investors are buying U.S. Treasuries and U.S. dollars as a hedge against the current macroeconomic situation -- the concern about the eurozone, about Greece."
Gold may draw more interest once things have settled, but for the time being, the eurozone outlook remains murky.
"As we've seen in previous times in this crisis like in 2008, you typically get a shift into gold once it becomes clear what the scenario is going to look like. At the moment we still don't know what the scenario will look like," Grubb added. "On the other side, investors have been selling gold as they've raised cash weightings, moved into the dollar, invested in Treasuries. They've sold gold in order to repair damage in their portfolios."
According to the World Gold Council, global demand for gold has dropped 5% in the first quarter of 2012.
Demand in India, the largest gold market in the world, was weak due to import taxes and an excise tax. However, China has seen its demand rise 10%.
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SPDR Gold Shares ETF
Max Chen contributed to this article.
Disclosure: I am long GLD. Tom Lydon's clients own GLD.