(Adds comment, updates prices)
* Gold hits near seven-year peak at $1,610.90
* Palladium reaches record high of $2,079.50
* Gold is technically overbought - analyst
By Asha Sistla
Jan 8 (Reuters) - Gold surged more than 2% on Wednesday to
break the $1,600 level for the first time in nearly seven years
as investors flocked to safe havens after Iran launched
retaliatory missile strikes against U.S. forces in Iraq.
Prices later edged off their highs after tweets by U.S.
President Donald Trump and Iran's foreign minister eased
concerns over an immediate further escalation in the conflict,
but remained well supported.
Spot gold XAU= was 1% higher at $1,589.40 per ounce by
0758 GMT, having earlier hit its highest since March 2013 at
$1,610.90, up 2.4%. U.S. gold futures GCcv1 rallied 1.1% to
$1,590.90.
Iranian state television said that at least 80 "American
terrorists" were killed in attacks involving 15 missiles Tehran
launched on U.S. targets in Iraq on Wednesday morning.
The move by Iran came hours after the funeral of Tehran's
top military commander Qassem Soleimani, whose killing in a U.S.
drone strike last week intensified fears of a war in the Middle
East.
"Fears of uncertainty and further escalation in this
military confrontation are dragging up gold prices," said
Margaret Yang Yan, a market analyst at CMC Markets.
"This (the Iran situation) is definitely fuelling demand for
safe havens, not just gold but also yen, while equities are
being heavily sold off."
Risk aversion spiked as the attack threw financial markets
into disarray, whipsawing Asian shares. MKTS/GLOB
However, bullion gave up some gains after U.S. President
Donald Trump said in a tweet late on Tuesday that "All is
well!", and that he would make a statement on Wednesday morning.
"Concerns should recede to an extent. The broader consensus
prevails that this conflict should resolve going forward," said
Hitesh Jain, vice president of Mumbai-based Yes Securities. "No
country can afford a war."
Gold is considered a safe investment in times of political
and economic turmoil.
CMC Markets' Yan said that from a technical perspective gold
is heavily overbought, and that a pullback could occur if Trump
resolves the issue diplomatically without "triggering a
full-blown war."
The metal's 14-day relative strength index (RSI) was around
88. An RSI above 70 indicates a commodity is overbought.
Elsewhere, palladium XPD= hit another all-time peak of
$2,079.50 an ounce on a sustained supply deficit, and was last
up 1.3% to $2,078.00.
"Palladium fundamentals remain quite strong and (the metal)
faces significant upside risks," UBS strategist Joni Teves said
in a note. "Tight market conditions are well-reflected in record
spot prices and persistent backwardation in forwards."
Silver XAG= was 0.7% higher at $18.52 per ounce, after
earlier hitting its highest since early September at $18.85,
while platinum XPT= was down 0.2% at $969.46.
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Spot gold at 7 year peak https://tmsnrt.rs/2QxP6mz
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