Turmoil in the Middle East has sent investors scrambling for safety once more, reigniting a debate over which assets truly offer protection in times of stress.

The choice is complicated, as traditional refuges behave unpredictably. Gold has swung sharply, and the dollar — which has been out of favour in the past year — has bounced back.

The dollar index, which tracks the US currency against six others, is up 1.5 per cent. The dollar has even gained against the Swiss franc and yen, which both typically outperform at times of market stress.

Government bonds have struggled to attract the kind of safe-haven flows typically seen during geopolitical shocks, with investors trading them primarily on the inflation outlook rather than on their defensive qualities.

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