* Gold hits highest since July 17
* Palladium hits record high
* EU executive rejects Italian 2019 draft budget
(Updates throughout, adds quotes, prices, details)
By Swati Verma
BENGALURU, Oct 23 (Reuters) - Gold jumped 1 percent to a more than three-month peak on Tuesday, with investors spurred on by a slide in global equities and rising political and economic uncertainty, including concerns over Italy's spending plans.
Palladium soared to a record high, with additional support from expected renewed demand from the Chinese automotive sector. gold XAU= was up 1 percent at $1,233.69 an ounce at 1432 GMT, having touched its highest since July 17 at $1,239.68.
U.S. gold futures GCcv1 rose 1 percent to $1,236.60, also helped by positive currency fundamentals as the dollar turned lower .DXY . USD/
"Gold is supported by rising risk aversion washing through the markets and that is reflected in falling equity markets worldwide," said Societe Generale (PA:SOGN) analyst Robin Bhar.
"Political uncertainty in Italy, geopolitical risks in the Middle East, Turkey and elsewhere had some safe-haven flows coming in and extending the rally in gold prices that began a couple a weeks ago."
Gold prices have gained more than 6 percent after falling in mid-August to their lowest since January 2017 at $1,159.96 an ounce.
"Now we have risen above the 100-day moving average (around $1,224), which is key, so maybe we can see it rise to $1,250, which could be the next target," said Commerzbank (DE:CBKG) analyst Carsten Fritsch.
EARNINGS DISAPPOINTMENTS
World shares sank towards their lowest level in a year, pressured by disappointing corporate earnings, Saudi Arabia's diplomatic isolation to a brewing spat over Italy's finances. MKTS/GLOB
The European Commission decided to reject Italy's 2019 budget and asked Rome to present a new document within three weeks. have a whole series of situations in connection with Saudi Arabia and Russia, and trade tensions between U.S. and China, and that has been having a knockdown impact on equities and in turn providing support to gold prices," said Capital Economics analyst Ross Strachan.
Investor flows into bullion, often considered a safe store of value during times of economic and political uncertainties, also continued to increase.
Holdings at the world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD , rose 0.3 percent to 747.88 tonnes on Monday. GOL/ETF
Meanwhile, palladium XPD= was up 0.2 percent at $1,124.40 an ounce.
Used mainly in emissions-reducing autocatalysts for vehicles, palladium has gained some 7 percent so far this year to hit a record $1,150.50 an ounce, about $100 away from the price of gold. combination of factors, from tight supplies and large deficits to resurgent interest from speculative investors, has kept the platinum group metal (PGM) on the boil.
Among other precious metals, silver XAG= rose 0.8 percent to $14.73, while platinum XPT= was up 0.9 percent at $827.24.