The recent rally in gold is driven by fear of currency fluctuations and not just the fear of inflation, Louis Gargour, chief investment officer at LNG Capital, told CNBC.com Wednesday.
Intervention from governments and central banks trying to reduce their relative currency values are adding to uncertainty in the market, he said.
The Bank of Japan cut its key interest rate effectively to zero this week in a bid to ease the strength of the yen and boost the country's export-led economy. Meanwhile, the Federal Reserve has signalled that it intends to carry out a second round of quantitative easing, which is pushing the dollar lower against other major currencies.
Such moves are driving investors to the precious metal as gold can offset global currency exchange fluctuations, according to Gargour.
"The great debate is, why am I buying gold… and the real answer is preservation of the value of your currency, it's not just inflation," he said.
Gold is acting like a reserve currency, similar to when the gold standard existed before Bretton Woods, he said. Bretton Woods was a system of monetary management brought in at the end of World War II that introduced fixed exchange rates.
"If you buy it in whatever currency you're buying it in, you have a stable, non-fluctuating base price," he said.
The other major factor pushing gold prices higher is the risk of inflation, driven by growth from emerging markets such as China, India and Latin America, according to Gargour.
"You're buying into that global reinflation story without having the individual currency fluctuations. I think that's why I think you're seeing a lot of buyers," he said.
The price of gold hit another record high $1,349.80 an ounce Wednesday as the dollar continued to weaken.