The gold price today fixed above the ‘symbolic’ $1000.00/oz mark reaching $1,003.50 at the London PM fix, after sailing through previously uncharted territory since the start of the year. On January 3 this year the price reached $865.35/oz, breaking the $850/oz record set momentarily back in 1980. The rise translates to an annual increase of more than 52% on the average price in March 2007, which sat at $655.89/oz. James Burton, CEO of the World Gold Council, commented: “The gold price has continued to surge forward on the back of strong investor sentiment reaching the $1,000 mark, much quicker than even many bullish analysts had predicted. We are seeing encouraging recent trends particularly in the investment sector, in a number of the world’s key gold markets as investors take ‘flight to quality’ in the face of the credit squeeze and ongoing financial turbulence. Global events, including a falling dollar and rising inflationary fears, have combined with strong gold market fundamentals to create positive conditions for the gold price. Whilst the rising and volatile price has been a highly positive trend for those already holding gold, it has posed a short term problem in regard to consumer purchases of jewellery, gold bars and coins, acting as a disincentive to some buyers.”Investment demand for gold reached an all time quarterly record of $8 billion in fourth quarter 2007. Over the year total demand for gold reached an all time high of $79 billion. Today’s $1,000/oz record follows a sustained rise in price over the past six years.The World Gold Council identified the following short term reasons for the recent gold price rise:Inflationary fears as a result, in particular, of high oil prices. Gold is seen as a hedge against inflation; while its real value can vary in the short term, its purchasing power has remained stable over centuriesContinued weakness in the dollar. Gold is a statistically proven hedge against fluctuations in the US dollar, the world’s main trading currency. The dollar has lost 5% against the Euro since September 2007.Unstable financial conditions in the light of recent and ongoing credit crisis. Gold is not matched by a liability. It can help to provide insurance against extreme movements in the value of traditional asset classes that can happen during unsettled timesThese short-term factors have, however, occurred on top of longer-term movements in supply and demand fundamentals that have supported the rise in the gold price since 2001:Mine output. The gradual reduction of mine output in recent years, with only a small number of major gold finds by the mining industry, is constraining supply. The cost of extracting gold has also increased substantially in recent years.Jewellery demand. Robust global jewellery demand reaching $54 billion in 2007, a third successive annual record. In tonnage terms, overall jewellery demand in 2007 was 6% higher than in 2006Both institutional and retail investors are increasingly familiar with gold’s portfolio diversification benefits. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset class or set of assets that move in a similar direction. Portfolios that contain gold can be more robust and better able to cope with market uncertainties than those that do not.Easier access to investing in gold.Gold exchange traded funds (ETFs) have been instrumental in providing easy access to investing in gold. ETFs have stimulated demand because it has become as easy to trade gold as it is to trade any stock or share.