Gold prices have hit a seven-week high after a surprise rally pushed it above the $300 an ounce barrier.

On Wednesday, gold prices drifted just below the $300 mark until news of a further suicide bombing in Israel heightened fears of fresh waves of violence in the region and drove the price higher in US and Asian trade.

Spot gold started the European session at $303.35, its highest opening level since 8 February.

Gold has risen nearly 12% since the morning before the attacks on 11 September.

Secure investment?

The unexpected rally ahead of the long Easter weekend was also driven by expectations of Japanese buying on Friday when European markets would be closed.

In Japan, investing in the metal is seen as a potentially safer option than putting money in the country's ailing banks or stock market.

"At this stage, the downside appears limited given the fact that the Japanese market (a major buyer in recent months) will be open for business on Friday and few will want to go home short today," one trader said.