(Oct 18): Gold rose more than 1% on Wednesday after a deadly blast in Gaza raised fears of an escalation in the Middle East conflict and pushed investors towards safe-haven assets.

Spot gold rose 1% to US$1,941.50 per ounce by 1007 GMT, its highest since Sept 20. US gold futures also jumped 1% to US$1,955.60.

The escalation in the Middle East "is certainly driving at least part of the demand for gold," said ActivTrades senior analyst Ricardo Evangelista.

The perspective that maybe the Federal Reserve has reached the peak of monetary policy is also helping sentiment for bullion, Evangelista added.

Hundreds were killed in a blast at a Gaza City hospital on Tuesday, Palestinian officials said, igniting protests around the Middle East.

Gold, seen as a safe haven in times of political and financial uncertainty, also benefited from a weaker dollar, which moved lower after better-than-expected Chinese growth data. A weaker dollar makes gold less expensive for holders of other currencies.

Gold prices have risen more than US$100 since the Middle East conflict flared up despite robust US economic data boosting bets of higher-for-longer interest rates, which tends to weigh on non-yielding gold.

Investors are looking to Federal Reserve Chair Jerome Powell's speech on Thursday for cues on interest rates after recent dovish comments from several US policymakers.

Markets are pricing in around a 90% chance that the Fed will leave interest rates unchanged at its policy meeting next month, according to the CME FedWatch tool.

Improved technicals are also helping gold, in addition to the likelihood that the Federal Open Market Committee could signal another pause in rate hikes, said StoneX analyst Rhona O'Connell.

Taking cues from gold's move, spot silver advanced 1.6% to US$23.20, platinum rose 0.7% to US$903.24 and palladium fell 0.6% to US$1,136.33.