Bloomberg - Gold held near the highest level in more than six years as risk appetite crept back into equity markets, with investors on alert for Iran’s next move in the showdown with the U.S.

Gold, which climbed 2.4% over the past two days to approach $1,600 an ounce, was little changed Tuesday as equities in Europe and Asia jumped.

Bullion investors have been in thrall to developments in the Middle East in the past few days after a U.S. drone strike killed General Qassem Soleimani. Iran is assessing 13 scenarios to respond and even the weakest of those options would be a “historic nightmare” for the U.S., the head of Iran’s national security council was cited as saying by the nation’s semi-official Fars news agency.

“Elevated geopolitical risks across the heart of the Middle East should support a stronger gold price environment this winter,” Citigroup Inc. analysts including Tracy Liao wrote in a note. The bank cautioned that it’s difficult to trade gold purely from the angle of heightened military tensions, but noted there are “bullish fundamental tailwinds” in place.

Spot prices edged higher to $1,568.40 an ounce at 11:40 a.m. in London. On Monday, gold hit $1,588.13, the highest since April 2013.

History suggests that gains driven by geopolitical tensions alone may be short-lived, Macquarie Group Ltd. strategists including Marcus Garvey said in a report.

“To illustrate this with the examples of Gulf War 1, the World Trade Center attack of 9/11 and last year’s strike on Saudi Aramco’s Abqaiq facility, gold prices initially jumped higher but were ultimately unable to sustain their newly elevated level,” they said.

Still, there are several other factors in place that are supportive for gold prices, Credit Suisse analysts including Fahad Tariq said in a note this week. Those include a weaker dollar, dovish central bank policies and uncertainty over a more comprehensive deal between Washington and Beijing.

In other precious metals, palladium hit a fresh record, with spot prices reaching $2,042.91 an ounce Tuesday. Silver was little changed and platinum gained.