* Gold sees best one-day pct gain since June 2016
* Palladium hits highest since Jan. 26
* Holdings in SPDR Gold Trust rise for first time since July (Updates prices)
By Sethuraman N R
BENGALURU, Oct 11 (Reuters) - Gold prices on Thursday jumped over 2 percent to more than a two-month high as tumbling global stock markets sent investors rushing to the safe-haven asset.
Spot gold rose 2.6 percent to $1,225.26 as of 2:11 p.m. EDT (1811 GMT), after hitting its highest since July 31 at $1,226.27. It was also the metal’s best one-day percentage gain since June 2016.
U.S. gold futures settled up $34.20, or 2.87 percent, at $1,227.60.
Bullion broke above a narrow trading range it has been stuck in for the past 1-1/2 months, triggering fresh buying interest and forcing investors to cover their short positions, analysts said.
Wall Street extended its slide to a sixth session on Thursday after European stocks slumped to a 21-month low, pointing to growing risk aversion across global markets.
“A lot of people are running to gold as a safe-haven trade, diversifying into the asset and selling the dollar,” said Michael Matousek, head trader at U.S. Global Investors.
“Now that gold has broken through the strong resistance level at $1,210, a lot of new long positions are coming in.”
Meanwhile, U.S. President Donald Trump, for a second day, criticized the Federal Reserve on Thursday, calling its interest rate increases a “ridiculous” policy that was making it more expensive for his administration to finance its growing deficits.
The Fed increased rates last month for the third time this year and is widely expected to raise them again in December.
“As a stock market selloff continues, gold is once again a desired destination in times of uncertainty. The metal had lost some cache in minds of investors, but when there is no clear safe haven. Funds are flowing to gold,” said Alfonso Esparza, Senior Market Analyst at OANDA.
Gold has fallen more than 10 percent from a peak in April, with investors increasingly switching to the safety of the greenback as the U.S.-China trade war unfolds against a backdrop of rising U.S. interest rates.
But prices have recovered from a 1-1/2-year low of $1,059.96 hit in mid-August, propped up by limited safe-haven buying at lower levels linked to concerns over economic growth and inflationary pressure from soaring oil prices.
Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.2 percent to 738.99 tonnes on Wednesday, the first gain since July and the biggest inflow since March.
Silver rose over 2 percent to $14.56.
Palladium rose 1.4 percent to $1,082.22, after hitting its highest since Jan. 26 at $1,096.80.
Platinum climbed 2.5 percent to $839.74, after touching its highest since July 26 at $843.90. (Reporting by Nallur Sethuraman, Arpan Varghese and Swati Verma in Bengaluru; Editing by Marguerita Choy and Adrian Croft)