(Updates prices, analyst comments)
* Palladium hits all-time high of $2,031/oz
* Gold eyes $1,600/oz- analyst
* World stocks slump, erase new year's gains
By Karthika Suresh Namboothiri
Jan 6 (Reuters) - Gold prices surged on Monday as the U.S. killing of a top Iranian military commander triggered fears of a wider conflict in the Middle East, prompting a rush to the metal's safety, while palladium soared past $2,000 an ounce for the first time.
Spot gold XAU= was up 1.1% at $1,567.80 per ounce as of 10:29 a.m. ET (1529 GMT), after rising to $1,579.72 earlier in the session, its highest since April 2013.
U.S. gold futures GCcv1 gained 1% to $1,568.40 per ounce.
"The markets are nervous about what comes next between the United States and Iran; there are political risks and there is safe haven buying in gold," said Bob Haberkorn, senior market strategist at RJO Futures.
"The equities are lower, and this is a perfect storm for higher gold between now and until we get some clarity on the situation."
Iraq's parliament called on Sunday for U.S. and other foreign troops to leave, while Iran lambasted U.S. President Donald Trump after he threatened to hit 52 Iranian sites, including targets important to Iranian culture, if Tehran were to retaliate. conflict took a hit at risk appetite, sending world stocks .MIWD00000PUS down 0.3%, erasing all its new year's gains in its biggest two-day fall since early December. MKTS/GLOB
The dollar index was 0.2% lower against six other major currencies, making gold cheaper to buy. .DXY . USD/
"Gold flew through last year's highs in early trade and ... safe havens are back in vogue and the yellow metal is leading the way," said OANDA analyst Craig Erlam in a note.
Elsewhere, U.S. Federal Reserve policymakers agreed that interest rates were likely to stay on hold for "a time," minutes of the Fed's Dec. 10-11 policy meeting, released on Friday, showed. is highly sensitive to interest rates, as higher rates lift the opportunity cost of holding non-yielding bullion.
Palladium XPD= was up nearly 2% to $2,025.22 an ounce, after hitting an all-time high of $2,031. The industrial metal added 53.93% in 2019, and is expected to remain in high demand this year.
"It (palladium) seems to be unstoppable. Many market players are of the opinion that the market will remain severely tight, and that's the main driving force for prices," Commerzbank (DE:CBKG) analyst Daniel Briesemann said.
Silver XAG= gained 0.7% to $18.16, having earlier hit its highest in more than three months at $18.50.
Platinum XPT= eased 0.9% to $971.82.