LONDON, Jan 6: The price of safe-haven gold rose to its highest for almost six years on Monday as investors piled into the precious metal over fears about a war in Iraq and an uncertain economic outlook.

Spot gold roared to $356.25 an ounce in European trading, its firmest since March, 1997 and up from Friday’s New York closing level of $350.90/351.50.

Bullion is 28 per cent higher than at this time last year, making it one of the strongest performing financial assets during a prolonged stock market downturn, a fragile spell for the dollar and a host of geopolitical tensions.

“Gold should remain firm for some time to come as global political tensions remain high, with the threat of war between the US and Iraq and/or North Korea,” said James Moore, metals analyst at TheBullionDesk.com.

Two Palestinian suicide bombings in Israel, a security scare in Frankfurt on Sunday and further dollar weakness and stock market losses also added to the sense of tension, traders said.

Prospects of another Gulf war and fears over further attacks like the September 11, 2001 assaults on US landmarks underpinned the metal.

“Gold is the current investment of choice...There is a general uncertainty in world affairs and Iraq characterises peoples’ fear of uncertainty,” said Peter Hillyard, head of Metal Sales, Europe for ANZ Investment Bank, adding that gold had the potential to go to $375.

A weaker dollar also increased the attractiveness of dollar-denominated bullion for European investors.

“It doesn’t look like it is going to calm down just yet,” Simon Klimt, head of commodities at Westpac Banking Corp in Sydney, said.

By 1543 GMT, spot bullion had eased to $352.10/352.85 as traders took profits, Wall Street made opening gains and oil prices lost ground.

In US gold futures markets, February was up $1 at $352.60 an ounce, pulling back from the high set in electronic ACCESS trade at $357, which was last seen by benchmark futures in February 1997.—Reuters