PRECIOUS-Gold rises to near 7-year high on U.S.-Iran conflict; palladium breaches $2,000

(Updates prices)
* Trump threatens sanctions against Iraq
* Gold could test key $1,600/oz mark - analyst
* Palladium hits record at $2,020.41/oz
* Silver hits highest since Sept. 25

By Asha Sistla
Jan 6 (Reuters) - Gold surged close to a seven-year peak on
Monday, as investors flocked to the safe-haven metal on
escalating U.S.-Iran tensions, while palladium surpassed the
level of $2,000 to hit a record high.
Spot gold XAU= rose 1.4% to $1,572.59 per ounce by 0825
GMT. Earlier in the session, it had rallied as much as 1.8% to
touch $1,579.72, its highest since April 10, 2013.
U.S. gold futures GCv1 gained 1.4% to $1,574.50.
"The geopolitics is taking center-stage," said Benjamin Lu,
an analyst at Phillip Futures. "The Iran-U.S. tensions have
escalated to a boiling point, that's what has been pushing gold
prices up."
President Donald Trump threatened sanctions against Iraq on
Sunday after Baghdad called for American and foreign troops to
leave, amid a growing backlash over the U.S. killing of a top
Iranian military commander, heightening fears of wider
conflict. Further spurring uncertainty, Iran said it would drop limits
on enriching uranium, taking a further step back from
commitments to a 2015 nuclear deal with six major powers.
The market's risk-averse sentiment underpinned bullion,
which is often seen as an alternative investment during times of
political and financial uncertainty.
Asian equities moved away from an 18-month peak and oil
prices soared on the intense Middle East hostility. MKTS/GLOB
O/R
"If it (gold) breaks the key resistance level of $1,585, it
would lead to the key psychological level of $1,600," Lu said.
Investors also took stock of a private survey on Monday that
showed slower expansion in December in China's services sector,
with business confidence falling to the second-lowest on record,
despite a pick-up in new orders. Spot palladium XPD= hit an all-time peak of $2,020.41 an
ounce earlier, and was last up 1.6% to $2,018.62.
"The (palladium) market continues to tighten and that's what
is pushing the market up," said ING analyst Warren Patterson,
adding, "The key risk moving forward is how sustainable this
price move is."
Plagued by sustained supply deficit, palladium, used mainly
in catalytic converters in vehicles, rose about 54% in 2019.
Elsewhere, silver XAG= gained 1.7% to $18.33 an ounce,
after touching a more than three month high at $18.50, while
platinum XPT= advanced 0.4% to $984.83.