Gold prices scaled a one-week high on Monday after military conflict between Israeli forces and Palestinian Islamist group Hamas raised political unrest in the Middle East, boosting demand for safe-haven assets.

Israel's troops were battling on Monday to clear out Hamas gunmen more than two days after they burst across the fence from Gaza on a deadly rampage.

Spot gold jumped nearly 1% to $1,848.15 per ounce by 1021 a.m. EDT (1421 GMT), having hit its highest since Sept. 29. Prices touched a seven-month low on Friday after a rally in U.S. Treasury yields.

U.S. gold futures climbed 0.9% to $1,862.10.

There are a lot of questions about what could happen next in the Middle East, if the situation further escalates, then gold prices could move towards $1,900, said Bob Haberkorn, senior market strategist at RJO Futures.

Gold is considered a safe store of value amid political and economic turmoil.

The S&P 500 and the Nasdaq fell, while crude prices jumped more than 3% as the Middle East violence rattled markets.

Market focus is also on minutes from the Federal Reserve's latest monetary policy meeting and the U.S. inflation data due later this week.

"We do not believe the FOMC will continue to hike rates into increased uncertainty, and the prospect for peak rates have suddenly move closer despite the potential inflationary impact of higher oil prices," Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a note.

Traders are now pricing in an around 28% chance of another rate hike from the Fed this year, according to the CME Fedwatch tool.

Higher interest rates increase the opportunity cost of holding bullion.

Among other metals, spot silver gained 0.5% to $21.70 per ounce. Platinum rose 0.2% to $878.58, while palladium fell 2.2% to $1,132.12.

"Platinum demand from fuel cell vehicles is expected to offset a portion of the demand lost as autocatalyst demand falls," Heraeus analysts wrote in a note.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips)