To answer that question it is important to consider why the price has reached record levels. The surge is down to a number of factors.
In times of market turmoil, gold is viewed as a traditional 'safe haven' because of its low correlation with other asset classes.
And the market carnage looks far from over. On Friday the world banking system fell into a fresh crisis as one of America's biggest banks, Bear Stearns, was on the verge of collapse.
The Wall Street giant admitted it could go bust despite emergency government funding, prompting panic in stock markets around the world. Wall Street shares plunged and the $20bn (£9.8bn) value of Bear Stearns dropped by 50% in seconds.
Such panic is likely to send a flurry of investors towards gold but demand for the commodity continues to significantly outweigh supply.
Mined gold has been stagnant and a lack of new mines opening, offset against the decline in gold production, has meant a drop in supply levels, which in turn has helped to send its value rocketing.
In addition, the weak dollar has been making gold look cheap to foreign investors as gold is often used as a hedge against fluctuations in the dollar. If the greenback appreciates, the dollar/gold price falls, while a fall in the dollar relative to the other main currencies produces a rise in the gold price.
It was in January that gold prices cleared the 1980 record highs of $875 in benchmark futures and $850 in spot, and they are up around 20% this year. But can the price of gold rise much further? According to experts it would appear that it can. Its 1980 high, after adjusting for inflation is actually $2,200 according to ETF Securities, more than double where it is now.
Hector McNeil of the group says: 'The fundamentals behind gold suggest that it has a way to go. Demand is outstripping supply. The weak dollar is not going to go anywhere soon, as the US Federal Reserve is only going to bring interest rates down at the moment given the problems in America and inflation is creeping in across the board.
'Just look at the oil price which also hit a new high this week of $110.7 a barrel, this too has helped push up the price. All of this suggests that gold can rise further.'
Much of the demand is coming from emerging market central banks including Russia, South Africa and Argentina. China is also looking to diversify its huge foreign currency reserves away from the weakening dollar, with gold a consideration.
A small increase in China's percentage of gold reserves would cause a huge increase in demand. Asia, particularly India, and the Middle East are seeing large increases in domestic jewellery demand as disposable income increases.
Katherine Yang at fund analyst Morningstar says: 'When people think that paper currencies will be worth less in the future, they have historically looked to place their net worth into a more stable vehicle.
'And gold is typically viewed as a safe form of currency, as its value isn't as affected by inflation. Worries about the supply of gold have also pushed the price higher - for example, the recent electricity shortage in South Africa has caused some unease about mine production.'
Morningstar says the best time to enter this market is when gold is trading at historical lows rather than highs and discourages investors from performance chasing. Because the gold price is hitting peak levels, it will have to drastically increase from where it is now to deliver comparable returns.
'However, we don't have a crystal ball to accurately predict which direction gold will go next, and gold prices are notoriously volatile,' adds Yang. Indeed, after setting records in January 1980, gold plummeted by almost 50% to about $480 per ounce three months later.
James Hughes of spread betting firm CMC Markets says: 'So long as investors remain worried about the outlook for the US economy, gold will - as always - remain a popular safe-haven choice for cautious investors. Simultaneously, the ongoing devaluation of the greenback also seems set to lend significant levels of support to the metal - so long as we continue to consider the price in US dollars.'
Compared to other asset classes, gold is one of the oldest or if not, the oldest asset class, it is indestructible, easy to store, liquid, and unlike cash, allocated gold is not subject to the credit risk of a bank. For investors looking to invest in gold there are a number of options they can consider.
How can I invest?
Funds and exchange-traded funds (ETFs) are two avenues for investors who want concentrated gold exposure. Which strategy is the right one will be dependent upon individual investing needs and comfort levels as each route has its merits and disadvantages.
Precious-metal funds and unit trusts do not invest directly in the physical metal. Instead they own mining shares, such as Yamana Gold. These funds available in the UK also hold a smattering of exposure to other precious metals such as platinum or silver.
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