PRECIOUS-Gold powers towards 7-year peak as investors rush for safety

(Adds comments, updates prices)
* Gold on track for biggest daily gain since August 2019
* Palladium breaks key $2,000/oz level; hits record at
$2,028.28
* Silver jumps to more than 3-month high

By K. Sathya Narayanan
Jan 6 (Reuters) - Gold prices were near a seven-year high on
Monday as escalating tensions between United Stated and Iran
attracted safe haven demand, while palladium rose past a key
$2,000 level to hit a new record peak.
Spot gold XAU= rose 1.6% to $1,575.70 per ounce as of 1320
GMT, putting it on course for its biggest one-day jump in more
than four months. Earlier in the session it hit $1,579.72, its
highest since April 2013.
U.S. gold futures GCcv1 gained 1.7% to $1,578.20.
"It is more of anticipation of what could happen or what
might happen (between U.S. and Iran), which is now reflected in
the market. Basically the uncertainty that we don't know what is
going to happen," said Julius Baer analyst Carsten Menke.
"If this issue is something which remains in the political
area, like back and forth accusations and threats, then we
should not have a lasting impact on gold."
Bullion is often seen as an alternative investment during
times of political and financial uncertainty.
Gold prices have gained about 3% since the U.S. killing of a
top Iranian military commander on Friday that has heightened
fears of a wider Middle East conflict, prompting investors to
flee from risky assets. MKTS/GLOB
In currency markets the safe-haven yen surged to a
three-month high against the U.S. dollar - making dollar
denominated gold cheaper for investors holding other currencies.
USD/
U.S. President Donald Trump warned of a "major retaliation"
if Iran hit back and also threatened sanctions against Iraq,
which on Sunday called on for U.S. and other foreign troops to
leave as a backlash grows. "We found that spikes in geopolitical tensions lead to
higher gold prices when they are severe enough to cause currency
debasement," Goldman Sachs said, adding an escalation in
U.S.-Iranian tensions could further boost gold prices.
Emissions reducing auto-catalyst palladium XPD= hit an
all-time peak of $2,028.28 an ounce earlier, and was last up
1.6% to $2,018.64.
"It (palladium) seems to be unstoppable. Many market players
are of the opinion that the market will remain severely tight,
and that's the main driving force for prices," Commerzbank
analyst Daniel Briesemann said.
"More and more electric vehicles are coming onto the streets
which means less demand for palladium, which should prove to be
a big issue for palladium in the next few years but not felt
immediately."
Following gold's lead, silver XAG= gained 2.2% to $18.44
an ounce, after touching a more than three month high of $18.50,
while platinum XPT= advanced 0.4% to $984.10.