Gold futures posted the biggest gain in four weeks after Ukraine said rebels shot down a Malaysian jet carrying 295 people near its border with Russia. Palladium extended a rally to a 13-year high.
The Boeing 777 flight from Amsterdam to Kuala Lumpur was hit by a missile and went down near the eastern town of Torez, Ukraine's Interior Ministry said on its Facebook page. Gold rose earlier as the United States and the European Union imposed the most aggressive sanctions to date on Russian business.
Gold has rallied 9.5 percent this year, outperforming commodities, equities and Treasuries, as violence in Iraq and hostilities between Ukraine and Russia boosted demand for a haven asset. The metal also rose as the Federal Reserve has signaled interest rates will stay close to a record low.
The jet crash "heightened concerns over the tensions in Russia and Ukraine, and definitely triggered safe-haven buying," Chris Gaffney, a senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview.
Gold futures for August delivery rose 1.3 percent to settle at $1,316.90 an ounce at 1:35 p.m. on the Comex in New York, the biggest gain for a most-active contract since June 19. Trading was 29 percent above the 100-day average for this time, according to data compiled by Bloomberg.