NEW YORK (TheStreet) -- Gold prices surged late Thursday morning after Ukraine's Interior Minister said rebels shot down a passenger plane carrying 295 people in the country.

Gold for August delivery at the COMEX division of the New York Mercantile Exchange was jumping $15.90 to $1,315.70 an ounce. The gold price traded as high as $1,318.60 and as low as $1,298.10 an ounce, while the spot price was spiking $22.40, or 1.7%.

The Interior Minister said rebels shot down a Malaysian airliner that crashed in the east part of the country, Bloomberg reported.

"That's absolutely why gold's higher, no question about it. We're a big believe in the buy the rumor, sell the fact ," Graham Leighton, a precious metals trader at Marex Spectron, said in a phone interview from New York. "I think people are using this as insurance."

TheStreet Recommends

Details on the incident were not yet clear. But the escalating violence between Ukraine and Russia since the first quarter of the year put support under the gold price as a safe-haven hedge against geopolitical tensions that could have wider implications on the region and the markets.

Graham said if investigations prove that the Malaysian plane crash wasn't linked to the Russia and Ukraine conflict, then gold prices could drop as quickly as they spiked. He added that prices likely will gain if reports confirm that there is a link.

-- Written by Joe Deaux in New York.

>Contact by Email.

Follow @JoeDeaux