TENSION in the Middle and Far East has sparked a rapid rise in gold prices – the biggest in six years. The gold fix soared £4 an ounce in the second week of January – amplified to a $9 rise by the weakening dollar – as the world continued to brace itself for war in Iraq and further trouble with North Korea. Meanwhile low interest rates have made gold a more promising investment.

“The price rose to $350 when the Pentagon announced troop deployment in the Middle East, and when that was followed by tension between the US and North Korea, and the threatened attack on the ECB in Frankfurt, the price went over $356,” said precious metals dealer Michael Bloomstein of Brighton.

He added: “Political tensions don’t usually affect the price as much as this. Professional investors don’t seem too fazed, but private investors are getting edgy. It’s a bit like the grand old Duke of York – he marches his men up the hill and the price rises. If he marches them down again, perhaps the price will drop.”