Value is determined by demand, not just by scarcity. The demand for gold is not only not universally high, but I think its value is inflated well beyond its concrete intrinsic value by virtue of its use as an investment instrument.

Consider a hypothetical scenario: Imagine that trade in gold by investors, including governments, was banned. It could still be sold for use in jewelry, art and technology, but not as an investment. What would its value be in that case? I'd say far less than $1000 per ounce. Probably more like $100.