The price of gold has rebounded in recent weeks from five year lows of $1,080 per ounce last July to around $1,170 per ounce now. Many investors are asking if there is scope for further growth.

Gold enjoyed a bull run from 2001 to 2012 and almost doubled in value in the two years following the banking crisis of 2008/2009, reaching its highest price of $1,920 in September 2011.

The total growth of the metal was 332% over the period compared to a 4% total return for the FTSE 100. Of course, equities were impacted during that time by the ‘dotcom’ bubble, 9/11 and the Lehman Brothers collapse of 2008. Much of the increase in the value of gold was driven by a flight to safety by unnerved investors to hedge their positions and reduce their risk as risk appetite fell worldwide.

Gold will need some crisis to start the growth trend again such as a hard landing for China or the collapse of the Eurozone. While these events cannot be entirely ruled out, the current environment of persistently low inflation is an impediment to gold rising in value.

Low inflation is unlikely to go away soon as the Peoples Bank of China and the ECB have both announced further episodes of monetary easing. With the Fed set to increase US interest rates in December, the US Dollar will surely strengthen which is also a negative for gold and Goldman Sachs is predicting that as a result, gold will fall to $1,000 per ounce over the next 12 months.

While there is still plenty of macroeconomic uncertainty for investors to worry about, stocks now look a more attractive investment than gold. Share investing allows you to purchase a wide range of companies spanning a multitude of sectors each of which offers choices to suit investors with different risk/reward profiles. Those who like to take a punt on individual stocks might be lucky and pick a real winner. Shares also provide the potential for dividends which is not available to holders of gold.