SINGAPORE – Gold held its ground near the highest level in more than six years even as some appetite for risk crept back into equity markets, with investors on alert for Tehran’s next move in the showdown with the US.

Prices of the haven – which rallied 2.4% over the past two days to approach $1 600 an ounce – were firm, while Asian equities rebounded. The moves came after Washington committed more troops to the Mideast amid speculation that Iran will deliver on threats to retaliate for the US killing of a senior general.

“Elevated geopolitical risks across the heart of the Middle East should support a stronger gold price environment this winter,” Citigroup analysts including Tracy Liao wrote in a note. Prices may top $1 625 this quarter, but then normalise between $1 500 and $1 600, depending on events, they said.

Bullion investors have been in thrall to developments in the Middle East after a US drone strike killed General Qassem Soleimani last week, triggering threats of reprisals from Tehran. Goldman Sachs Group said that gold was a better hedge in the crisis than oil. Tensions remain high, with a three-ship US amphibious group ordered to the Persian Gulf region, following the deployment of about 3 500 soldiers to Kuwait last week.

“Recent events in the Middle East have further boosted retail and institutional inflows across bullion futures, options and ETFs,” Citi said, adding that gold had finished 2019 on a bullish note. And while the bank cautioned that it’s difficult to trade gold purely from the angle of heightened military tensions, there are “bullish fundamental tailwinds” in place.

Spot gold traded little changed at $1 565.55 an ounce at 7:12 a.m. in London, recovering from an initial 0.7% intraday drop. On Monday, prices hit $1 588.13, the highest level since 2013.

In Iran, Soleimani is due to be buried Tuesday in his southeastern hometown of Kerman, after mourners packed the streets of Tehran on Monday. Malaysian Prime Minister Mahathir Mohamad drew parallels between the general’s killing and the 2018 murder of Saudi dissident and columnist Jamal Khashoggi.

Investors are also focused on the monthly US jobs report due Friday, which could offer clues on the economy and the Federal Reserve’s monetary policy path. On the trade front, China is planning to sign a first-phase deal with the US in Washington on January 15, according to people familiar with the matter.