Fears of a Greek – or even US – sovereign debt default and the inflationary results of credit creation have driven gold to a record high over $1,600 per ounce, but investment strategists reckon the yellow metal could continue to rise.

Gold has risen around 19 per cent over the past six months, last trading at around $1,610 per ounce. Over the past 10 years, it has risen from under $300 per ounce to its present level, prompting occasional predictions that the bull market will reverse sharply. However, geopolitical problems in the Middle East, debt problems in Western economies and still-strong demand from emerging markets for gold have kept gold on a relentless upward path.

“The uncertainty over the global outlook and risk aversion could drive gold as high as $2,000 over the next year,” Mike Turner, head of global strategy and asset allocation at Aberdeen Asset Management, said in a note.

“Robust demand for gold in India and China over the last year has been a positive factor, but fears about the falling purchasing power of paper money and the rising risk of eurozone defaults are now further fuelling demand for precious metals. Gold clearly offers a store of value, given the negative real interest rates investors face in many countries,” he added.

And investment trust managers in the UK take the broadly similar view that the rally to gold is not over yet.

"The current fundamentals in the gold market are supportive of higher prices. Investment demand has been the most important driver of the bull market to date and the key factors that have been driving investment demand – concerns about financial markets, eurozone debt and inflation – are likely to persist for the foreseeable future. The potential for further net purchases by central banks could also be supportive of prices,” said Catherine Raw, co-manager of BlackRock World Mining Trust. (He was quoted in a roundup of opinions collated by the Association of Investment Companies).

“In terms of the gold equities, we believe that earnings will expand as gold prices rise and investors will be attracted back into the sector. The shares are currently trading at attractive valuation relative to bullion prices. The key threat to the gold market is an increase in real interest rates. When real interest rates begin to rise, the opportunity cost of holding gold will encourage investors to sell the metal. At the moment, we believe the interest rate and exchange rate environment remain bullish for gold," Raw said.

Francis Johnstone and Trevor Steel, managers of Baker Steel Resources Trust said: “The short, medium and long-term arguments for the gold price are very much still intact, particularly for gold mining companies, which have some way to catch up to reflect the current gold price let alone a rising metal price.”

“We do not hold any physical gold but hold approximately 7 per cent of the portfolio in gold shares, which is set to increase to around 10 per cent of the portfolio. However, our policy is to be project specific rather than commodity specific, so we have no plans for gold to be any particular proportion of the portfolio,” they said.

Will Smith, portfolio manager of City Natural Resources High Yield Trust said: “City Natural Resources has long maintained an overweight stance in gold and silver and currently has around 30 per cent of its assets in the precious metals.”

“Among the many events that would cause us to review our overweight stance are a rise in real interest rates, a return to trend growth in the developed economies and a credible solution to the sovereign debt and government deficit currently prevalent. We fully expect pullbacks in the chart, but the drivers of gold’s run are still valid and, on many criteria i.e. gold adjusted for inflation, the chart is not over-extended,” Smith added.