Pictet Funds, part of Pictet & Cie, the Swiss private bank, said it will launch a precious metals fund on 1 October, a move that comes as gold continues to trade at high levels amid continued concerns about the global economy.

The fund will be called the Pictet (CH) Precious Metals Fund – Physical Gold. The fund aims invest predominantly in standard gold bars of 12.5 kilos with a fineness of 995/1,000 or greater. It will be managed by Philippe Pol, a senior investment manager with Pictet Asset Management, the institutional investment management arm of Pictet & Cie.

Earlier in September, gold rose above $1,000 an ounce, fuelled by concerns about issues such as possible resurgent global inflation due to massive increases in the money supply by central banks; the weak dollar, continued growth from gold-hungry emerging markets, and speculative investment.

Among other firms with funds investing in physical gold or gold mining firms are the Merrill Lynch Gold and General Fund, the CF Ruffer Baker Steel Fund and the Investec Global Gold fund. Investors can also obtain exposure to gold via instruments such as exchange traded products.

Pictet said investors have the choice to redeem their units in kind and request physical delivery upon certain conditions.

“During times of financial stress, gold is a safe haven. Moreover, gold has consistently proven its ability to hedge against inflation and currency movements, and it can be used as an effective diversifier in portfolios,” said Mr Pol.

“The price of gold will remain driven by first, improving standards of living which increase demand for gold - not surprisingly, India and China have become the largest buyers of gold for use in fine jewellery, accounting for over 30 per cent of gold bought last year worldwide,” he said.

“Second, tight supply caused by rising extraction costs and a decline in exploration, which last year caused mining production to fall by 3 per cent. Physical gold’s fundamentals remain thus highly favourable. Investing through a reputable partner should therefore be very attractive to investors,” he added.

The fund is a Swiss domiciled vehicle and denominated in dollars.