Westpac Bank's Justin Smirk told the opening day of the Paydirt Australian Gold Conference in Perth today that while gold had a good future it was close to its peak price.

It will continue to do well but it will be outperformed by other rebounding commodities which will move faster as economies recover, Smirk said.

Gold is a good buy now as a hedge but perhaps not for much longer in terms of comparison against other metals.

The world deflationary spiral has, and is, currently keeping gold below US$1,000 an ounce and I don't expect it to get back above that, or not by much, for about two years.

In real terms and looking at the past 100 years, gold's value in Australia has not returned to inflationary levels of the 1980s which is around the equivalent of $US1,600 an ounce.

He said gold will need an outbreak of inflation to have a strongly positive future - but that means other commodities will also be benefiting at the same time and may outperform gold in every way - so on that basis, we question the perception of its true value.

Smirk said Westpac's forecasting suggested a gold price of around $US914/oz in 2010, rising to $US1,063/oz in 2011 and $US1,150/oz in 2012. The bank's own parallel forecasts for copper suggested the copper price performance would outperform gold over that period on a percentage basis.

He acknowledged that the current rush to gold was hardly surprising as cashed up China and European economies that would have invested a large share of their funds in the US had turned away from that due to the American economic downturn . Gold has been a short-term benefactor.

In another presentation Gold Fields Ltd said it has set its sights on producing 4 million ounces of gold on an annualised basis by the end of this year.

The South African miner's assets include the St Ives operations at Kambalda in Western Australia.

Gold Fields' Executive Vice-President, Exploration and Business Development, Tommy McKeith, said the gold price had trended upwards since July 2005 and was now maintaining a position in the high $US900s per ounce.

He said Gold Fields was on track to lift annual production from 3.5 M oz per annum to the 4 M oz target.

This has, however, required enhancements in how we operate including step changes in safety, completing a rehabilitation of some our mining infrastructure, delivering capital growth projects, sweating the assets and investing more heavily in exploration.

As a result, Gold Fields has recently achieved its best year-to-date safety figures since 1999. Rehabilitation work was completed on schedule on our Kloof, Driefontein, and South Deep Ramps operations - and expansion projects running into the hundreds of million dollars were completed by December last year at Tarkwa, Cerra Corona and the two new underground mines at St Ives.

St Ives is producing significantly higher grades and this has helped bring cash costs down from $US600/oz a few quarters ago to about $US470/oz today.