LONDON, Jan 17: The price of gold surged to its highest level in nearly six years here on Friday as investors scrambled for safe-haven assets amid mounting concerns about the prospect of war in Iraq.

On the London Bullion Market the price of an ounce of gold rose to a morning fixing of $358.20 the highest since March 1997 from $352.30 at its previous fixing on Thursday afternoon.

Traders in London marked prices up in response to strong gains late Thursday in New York following news that UN weapons inspectors had found 11 empty chemical warheads at an Iraqi munitions dump.

Prices of gold were going down this week and suddenly we got the news of the finding in Iraq, said SG Securities analyst Stephen Briggs.

Despite Washington’s apparent wariness of talking up the significance of the find, investors were quick to speculate that the development had reduced the chances of a US-led attack on Iraq being averted.

The market looks to be betting on a war. We’ve got a long weekend coming up and people don’t want to be caught short, said James Moore, analyst at the specialist website thebulliondesk.com.

Moore said that despite the recent sharp rise in gold prices, the metal had yet to decisively break out of a 22-year downtrend.

But he added that if gold could hold above 355 dollars, that key technical level would effectively have been breached.

If that happens I think there’s a lot of room on the upside, possibly up to 418-420 (dollars), Moore said.

Analysts added that the ongoing fall in the value of the dollar against other leading currencies was helping to fuel the gold price rally.

A decline in the value of the dollar against other currencies makes gold more attractive to international investors as the metal is priced in dollars on world markets.—AFP