Wires

PRECIOUS-Gold retreats from $1,600 as markets eye U.S. reaction after Iran attacks

Diptendu Lahiri

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 $2,079.50

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

Spot gold rose 0.7% to $1,585.30 per ounce by 0830 GMT, having earlier surged as much as 2.4% to its highest since March 2013 at $1,610.90. U.S. gold futures rose 0.5% to $1,582.90 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, saying at the end of this day we will either see gold back at $1,600 levels or going down to the $1,550.

Iranian state television said that at least 80 "American terrorists" 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.

But, 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 is 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 further got a boost from 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 hit another all-time peak of $2,090 an ounce on a sustained supply deficit, and was last up 1.3% to $2,077.75.

"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 0.3% at $18.44 per ounce, after earlier hitting its highest since early September at $18.85, while platinum fell 0.3%, to $967.85 per ounce.

(Reporting by Diptendu Lahiri in Bengaluru, editing by Louise Heavens)