Gold surged close to a seven-year peak on Monday, as investors flocked to the safe-haven metal on escalating US-Iran tensions, while palladium surpassed the level of $2,000 to hit a record high.
Spot gold rose 1.4% to $1,572.59 per ounce by 0825 GMT. Earlier in the session, it had rallied as much as 1.8% to touch $1,579.72, its highest since April 10, 2013.
US gold futures gained 1.4% to $1,574.50.
"The geopolitics is taking center-stage," said Benjamin Lu, an analyst at Phillip Futures. "The Iran-US tensions have escalated to a boiling point, that's what has been pushing gold prices up."
"If it (gold) breaks the key resistance level of $1,585, it would lead to the key psychological level of $1,600," Lu said.
Investors also took stock of a private survey on Monday that showed slower expansion in December in China's services sector, with business confidence falling to the second-lowest on record, despite a pick-up in new orders.
President Donald Trump threatened sanctions against Iraq on Sunday after Baghdad called for American and foreign troops to leave, amid a growing backlash over the US killing of a top Iranian military commander, heightening fears of wider conflict.
Further spurring uncertainty, Iran said it would drop limits on enriching uranium, taking a further step back from commitments to a 2015 nuclear deal with six major powers.
The market's risk-averse sentiment underpinned bullion, which is often seen as an alternative investment during times of political and financial uncertainty.
Asian equities moved away from an 18-month peak and oil prices soared on the intense Middle East hostility.