1) it's relatively rare 2) it's easily minted into objects of consistent mass. 3) because of quantum mechanics, gold has a yellow color. This makes it easy to verify gold content without advanced technology. You take a set of "gold standards", say, 99%, 90%, 80%, 75%, and then make a series of streaks against a black rock (http://en.wikipedia.org/wiki/Touchstone_%28assaying_tool%29). Then you take your sample and make a cross-streak. Then you and your trading partner can agree upon an approximate purity level at which you are willing to make the trade for goods.
currencies will be backed by actual work that provides social and economical value
Who decides what this value is? By hours consumed? Is one hour of sitting on your butt playing a video game worth the same as one hour helping to build a rocket that is destined to try to destroy a (hypothetical) asteroid on a collision course with the planet? How about by "type of work"? Well then, is one hour sitting on your butt playing a video game worth the same as one hour sitting on your butt playing a video game in a playtesting environment?
If it were possible, the absolute currency would be 'life time' as in the movie http://en.wikipedia.org/wiki/In_Time. In the absence of that, something equally dear for staying alive in a increasingly moving towards apocalypse world, like may be bottles of oxygen or water ? But even then, the things that are of value may not be easier/handy to barter/trade with. That is when an alternative 'scarce' 'hard to create and requires resource intensive mining' but 'easy to handle' , 'easy to determine purity' type of resource takes the place as a currency. Gold has that property inherently. Not saying that it is the only absolute resource that has it. But it is a time tested resource with those qualities.
If gold and other precious metals did not have their historical use as a currency and the trust of markets (and its suitability as a currency, I suppose), they would be worth at least an order of magnitude less than they are today. And it would be mined a lot less of them.
You forgot speculation. The reason it's so much more expensive than 10 years ago is because people expect that at a certain point inflation will finally be realized, and prices will be so high that it will be used for scientific, jewelry, and ornamental uses again, at prices even higher than today.
And even forgetting that, we have the fact that people buying gold to save removes it from the market, reducing supply at lower prices, leaving only higher bidders in the market. And you can still get gold tipped RCA cords, despite what you say. So as long as there are any consumption buyers just below the current price, the price is justified.
The easiest support for my argument would be looking at the list metals with a similar rarity to gold, and noting that gold is more expensive than all but platinum, despite having an annual production which is >15 times higher.
http://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth%...
Now, please provide a citation for your claim "gold's market value is mostly caused by demand from art and manufacturing processes". I claim that this wrong because 34% of all the world's gold is kept in vaults, and an additional 52% is stored in jewelry (of which a significant amount should be considered an investment by its owners due to the high market value).
http://en.wikipedia.org/wiki/Gold_reserve#World_gold_holding...
Gold has unique chemical, mechanical, and electrical properties - it's not just any old commodity.
Warren Buffett put it well. "Gold gets dug out of the ground in Africa, or someplace," he said. "Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head. Source:http://online.wsj.com/news/articles/SB1000142405274870403270...