NEW YORK (CNN/Money) - Gold prices rose to a six-year high Thursday as worries of war with Iraq escalated and the dollar continued to weaken.

Around noon ET, gold rose more than two percent to hit $365 an ounce in New York, its highest level since January 1997. It was set or "fixed" in London at $364.70 an ounce, also its strongest level in six years -- and 30 percent higher than this time last year.

"We believe this is a defined trend," said Dave Meger, senior metals analyst at Alaron Trading. "the next target is up around $400 and we think it's a realistic target, given the fundamental changes in the gold market."

Concerns over a possible war with Iraq gained weight after President Bush said Wednesday he would push to attack the country, if deemed necessary, with or without the support of the United Nations. The strong comments helped drive investors to gold, considered one of the safer investments in times of upheaval.

The upcoming report by U.N. weapons inspectors to the U.N. Security Council Monday about their findings in Iraq also added to global anxiety and helped support the rise in gold. Anticipation ahead of President Bush's "State of the Union" address Tuesday had a similar effect.

Also, aiding the price jump was a weakening dollar. As the dollar continues to fall, dollar-based commodities cheapen and demand for them rises.

The same factors that have helped gold, especially the mounting geopolitical pressure, have been hurting the dollar. The euro held near recent three-year peaks against the greenback Thursday.

The euro's ability to hold its footing above $1.07, after hitting a new three-year high Wednesday, showed its eight percent rally since early December has yet to lose steam, dealers said.

"Gold is in the spotlight as a hedge against inflation and as an asset that can be trusted in times of war," said Keith Goode, Eagle Mining Research analyst.

Traders also said more investors had begun adding gold to their portfolios as an alternative investment as equities markets remained weak.

Gold miners, or producers, have curbed their active hedge selling -- no longer wanting to lock in prices. This change too has helped push prices higher, said Meger.

But, gold dealers said the metal had built in a large war premium and they would watch for any potential reversal, such as efforts later on Thursday by a meeting of six Middle Eastern states in Istanbul to discuss ways to avert a potentially destabilizing war.

"If a war is averted, we could easily see gold retreat to, say, $335 an ounce," said Commonwealth Bank of Australia commodities strategist David Thurtell.  

-- from staff and wire reports