you also shouldn't forget where gold had started its rally to 1800$/oz. If I'm not mistaken, it began climbing to the top from as low as $400 per troy ounce (or even below).
Yes. Even at 1200$/oz, the price of gold is still unsupported by its demand for actual use. Maybe even at 400$/oz.
Gold and diamond are such superb materials, it is a pity that they are so expensive (and kept expensive in part by cartels). It would be so nice if they were as cheap as iron and glass...