By Charlotte Beugge

The world's most coveted metal proved again this week that it can be a contrarian investment. The gold price had its best single day of trading on Thursday after rising to more than $1,707.

The reason why the gold price rose was because the Federal Reserve, the US equivalent of the Bank of England, said that interest rates will remain low for two years at least.

As that means that leaving money on deposit will mean low returns, gold starts to shine as an investment because investors know it will always have a value, unlike shares in companies.

However, gold has been on a bull run for more than ten years now - in 2001 the price was just $270 an ounce, rising to more than $1,900 in September. That might suggest that it could be a good time to sell.

But Ted Scott, director of global strategy at F&C, said that gold should "continue to be an integral part of a diversified portfolio". Gold prices rose 10.2% in 2011 even though the price fell by more than $300 between its high point in September and the year end.

Mr Scott added: "What has been noticeable is that the volatility of the gold price has increased in recent years and when the price has fallen the declines have been sharp and sudden.

"This reflects the way gold is traded today and the amount of financial interest in the asset, especially through Exchange Traded Funds (ETF)."