(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 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 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. 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. 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 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 gained 2.2% to $18.44 an ounce, after touching a more than three month high of $18.50, while platinum advanced 0.4% to $984.10. (Reporting by K. Sathya Narayanan in Bengaluru. Editing by Jane Merriman and Chizu Nomiyama)
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