Gold surged to a record high on Monday while silver struck a near 12-year peak, as growing uncertainties surrounding the U.S. presidential election and the Middle East war added to gold's rally already fueled by expectations of interest rates easing.

Spot gold gained 0.7% to $2,739.50 per ounce, as of 9:50 a.m. ET (1350 GMT), after hitting a record $2,740.37 earlier in the session. U.S. gold futures were 0.7% higher at $2,750.00.

Bullion, considered a hedge against political and economic uncertainty due to its ability to store value, has climbed over 32% so far this year, shattering multiple record peaks as the Federal Reserve's interest rate cut combined with safe-haven demand set up a perfect storm for gold.

"We're getting closer to the U.S. elections, a couple of weeks out now... we're seeing geopolitics play out in the Middle East, Israel, Iran, whatever kind of stuff is going on behind the scenes," which is helping gold prices, said Daniel Pavilonis, senior market strategist at RJO Futures.

With the U.S. presidential election just over two weeks away, former President Donald Trump and Vice President Kamala Harris are caught in a knife-edge battle to win over some of the more competitive states.

Meanwhile, hundreds of Beirut residents fled their homes as Israel prepared to attack sites linked to the financial operations of Hezbollah, aggravating fears of conflict escalation.

"We look for gold to reach to $2,900/oz over the next 12 months, supported by further rate cuts by the Fed," UBS anayst Giovanni Staunovo said.

Traders now see a 90% chance of a quarter basis point cut by the Fed in November.

Spot silver rose 1.2% to $34.06 per ounce, its highest since late-2012.

"You're starting to see the (silver) market break out, which would entice more people to come in from the sidelines and start picking up silver," Pavilonis added.

"We could see maybe gold slow down its speed and silver start to pick up and catch up with gold."

Platinum rose 0.1% to $1,014.20 per ounce, its highest since mid-July. Palladium fell 1.1% to $1,067.49.

(Reporting by Anjana Anil and Anushree Mukherjee in Bengaluru; Editing by Shailesh Kuber)