PRECIOUS-Gold gains on heightened safe-haven interest, palladium soars

(Updates prices, adds comments)
* Volumes thin with U.S. closed for Martin Luther King Jr.
holiday
* Break above $1,562 could set gold up for further gains -
analyst
* SPDR Gold holdings rise to highest in over 2 months
* Palladium soars to $2,582.19/oz

By Diptendu Lahiri
Jan 20 (Reuters) - Gold hit a more than one-week high on
Monday as buyers hedged against persistent tensions in the
Middle East and impeachment proceedings against U.S. President
Donald Trump, while deficit-hit palladium's record run showed no
signs of abating.
Spot gold XAU= was up 0.2% to $1,559.99 per ounce by 1514
GMT, having earlier touched its highest since Jan. 10 at
$1,562.51. U.S. gold futures GCcv1 were little changed at
$1,560.20.
"Investors are flocking towards gold in spite of a spike in
equity markets, mostly because of long-term uncertainties like
political insecurity, probable equity market volatility..., weak
earnings expectations and ultra-low interest rates," Commerzbank
analyst Eugen Weinberg said.
Investors are pouring money into gold-backed exchange-traded
funds (ETF) and central banks are buying the metal at record
rates, Weinberg added.
Holdings of the world's largest gold-backed ETF, SPDR Gold
Trust GLD , rose to 898.82 tonnes on Friday, the highest since
Nov. 11. GOL/ETF
Investors kept a close eye on developments in the Middle
East after a military blockade led to the shutdown of oil
facilities in Libya, sending oil prices to a more than one-week
high on Monday. O/R
That followed an attack by Iran-aligned Houthis on a
military training camp in Yemen on Saturday. In Washington, President Donald Trump will offer his first
comprehensive defence on Monday before his impeachment trial in
the Senate. Bullion largely ignored positive momentum in the dollar and
world stocks following a host of robust economic data.
MKTS/GLOB USD/
Trading volumes were low with U.S. markets closed for a
holiday. Focus is now likely to turn to the U.S. Federal Reserve
as it meets for its first policy meeting of the year later this
month.
The Fed cut interest rates three times last year before
deciding to stand pat. On the technical front, gold is consolidating above the
$1,550 support, ActivTrades chief analyst Carlo Alberto De Casa,
said in a note.
A clear break above $1,562 an ounce could set gold up for
further gains, with the first target around $1,577, followed by
resistance near $1,593 and then the seven-year peak around
$1,611, the note added.
Scarce autocatalyst metal palladium XPD= was up about 0.1%
to $2,482.24 per ounce after earlier hitting a record high of
$2,582.19. "Looking ahead to the next few months, the picture is
slightly less pronounced: the forward curve is falling sharply,
meaning that market participants expect the (tight
supply)situation to ease somewhat," Commerzbank said in a note.
Silver XAG= rose 0.3% to $18.06, while platinum XPT=
was up about 0.5% to $1,012.55 per ounce.