By Mark Gregory BBC World Service business reporter

Gold prices have risen to a new six-year high on concern about the economic consequences of an American-led military campaign in Iraq.

The gold price was set at $364.70 an ounce in the London afternoon session on Thursday, up from the morning's fix of $363.30, and the highest level since 3 January 1997.

After years at the margins of the modern financial system, gold has regained something of its traditional status as a safe haven in times of trouble.

Investors have been buying gold largely because the main alternative, the dollar, is so weak.

In dealings on the currency markets, the dollar has fallen to its lowest level against the euro for three years.

Gloomy outlook

When political tensions are high, investors put their money in assets which they think are unlikely to fall in value.

During the last Gulf conflict a decade ago, the markets sought safety in the dollar.

The dollar is trading at 25% below the value it had a year ago

This time round they seem to be opting for gold.

The value of the precious metal has soared in recent weeks.

Meanwhile the dollar is currently trading at 25% below the value it had only a year ago.

The markets are worried that the cost of fighting a war against Iraq would further strain an already weak US economy.

The threat of military action has also increased the gloom on global stockmarkets.

For example, shares in London, Paris and Frankfurt are almost back down to the multi-year lows seen last autumn.

There's continuing unease about the health of the world economy.

Rising tensions in the Gulf have given investors another reason to dump their shares.