Gold surged more than 2% today to break the $1,600 level for the first time in nearly seven years as investors flocked to safe havens after Iran launched retaliatory missile strikes against US forces in Iraq. 

Prices later edged off their highs after tweets by US President Donald Trump and Iran's foreign minister eased concerns over an immediate further escalation in the conflict, but remained well supported. 

Spot gold was 1% higher at $1,589.40 per ounce this morning, having earlier hit its highest since March 2013 at $1,610.90, up 2.4%. 

Iranian state television said that at least 80 "American terrorists" were killed in attacks involving 15 missiles Tehran launched on US targets in Iraq this morning.

The move by Iran came hours after the funeral of Tehran's top military commander Qassem Soleimani, whose killing in a US drone strike last week intensified fears of a war in the Middle East.

"Fears of uncertainty and further escalation in this military confrontation are dragging up gold prices," said Margaret Yang Yan, a market analyst at CMC Markets.

"This Iran situation is definitely fuelling demand for safe havens, not just gold but also yen, while equities are being heavily sold off."

Gold is considered a safe investment in times of political and economic turmoil.

CMC Markets' Yan said that from a technical perspective gold is heavily overbought, and that a pullback could occur if Trump resolves the issue diplomatically without "triggering a full-blown war."

Meanwhile, palladium hit another all-time peak of $2,079.50 an ounce on a sustained supply deficit, and was last up 1.3% to $2,078.00. 

Silver  was 0.7% higher at $18.52 per ounce, after earlier hitting its highest since early September at $18.85, while platinum was down 0.2% at $969.46.