Gold was trading at $US1580.20 per ounce at 11.37am (AEST), prompting pundits to speculate where it would go next.
 
Fat Prophets analyst Colin Whitehead said gauging where gold was headed was made difficult by the strong emotions the precious metal elicited in both supporters and detractors.
 
“The doubters argue that gold is in a classic investment bubble driven by new investment vehicles such as [exchange traded funds], in addition to short-term factors such as negative real interest rates,” Whitehead said.
 
“Gold, they argue, has no intrinsic value save for how it is viewed by those buying jewellery.
 
“In this sense the 'bizarre' fascination with the yellow metal has created a billion dollar industry extracting gold from the ground in Africa and putting it back below again in London and New York bank vaults.”
 
Whitehead said supply of gold was lacklustre due to weak mining output, falling gold recycling levels and official sector net buying
 
Jewellery purchases among the Chinese and Indian middle classes were expected to be maintained, boosting the demand side of the gold outlook.
 
Regarding investment demand, Whitehead said emerging market growth, particularly from China, was particularly important.
 
“In countries like India and China central banks are increasing their holdings of gold which has contributed to the switch of central banks from net buyers to net sellers of gold,” he said.
 
“Emerging markets are also seeing strong investor demand as the newly wealthy diversify into gold and consumers in general get the gold bug.
 
 “Most emerging markets also have trade surpluses with the US which leads to the accumulation of dollars. As such many countries are choosing to diversify from dollars into gold given the weak outlook for the currency.”