PRECIOUS-Gold below $1,600 as markets await U.S. reaction to Iran attacks

(Adds comments, details; updates prices)

* Gold earlier hit a near seven-year peak at $1,610.90

* U.S. President Trump to make statement on Wednesday

* Palladium reaches record high of $2,101

Jan 8 (Reuters) - Gold surged past the $1,600 level for the first time in nearly seven years earlier on Wednesday after Iran carried out retaliatory attacks against U.S. forces in Iraq, but the metal pared gains as investors awaited reaction from the White House.

Spot gold rose 0.4% to $1,579.33 per ounce at 1246 GMT, having earlier risen as much as 2.4% to its highest since March 2013 to $1,610.90. U.S. gold futures rose 0.4% to $1,580.70 per ounce.

“Gold is paring some gains right now as the retaliation was not seen as aggressive as the markets thought it would be and investors are booking profit for that reason,” Saxo Bank analyst Ole Hansen said.

“How gold will move from here is pinned on what U.S. President Donald Trump says when America wakes up,” Hansen added. He said at the end of this day gold would either be back at $1,600 levels or be heading down to $1,550.

Iranian state television said that at least 80 people 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.

U.S. President Trump said in a tweet late on Tuesday that “All is well!”, and that he would make a statement on Wednesday morning.

Iranian Foreign Minister Mohammad Javad Zarif also tweeted that Iran was not seeking escalation or war but would defend itself against any aggression, leading to some pull-back in gold prices.

The metal, considered a safe investment in times of political and economic uncertainties, was still supported as fears of a military lockdown in the Middle East remained.

Gold was also supported by a dip in equities markets.

The metal’s 14-day relative strength index (RSI) was around 88. An RSI above 70 indicates a commodity is overbought.

Elsewhere, palladium rose 2.2% to $2,097.24 per ounce, after hitting another all-time peak of $2,101 an ounce on a sustained supply deficit.

“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 was up 0.1% at $18.41 per ounce, after earlier hitting its highest since early September at $18.85, while platinum was flat at $970.85 per ounce.

Reporting by Diptendu Lahiri in Bengaluru, editing by Louise Heavens and Jane Merriman