GOLD The conflict USA-IRAN; $1,600 Next Target

Gold prices hit near seven-year highs on Monday, helped by a bullish endorsement of the yellow metal by Goldman Sachs as risk-averse investors piled into safe havens amid the worsening U.S.-Iran conflict.

Gold futures for February delivery on New York’s COMEX settled up $16.40, or 1.1%, at $1,568.80 per ounce. It hit 1,588.65 earlier, its highest level since 2013, with some analysts targeting $1,600 next.

Spot gold, which tracks live trades in bullion, was up $15.63, or 1.0%, at $1,567.03 by 2:00 PM ET (20:00 GMT), after a peak at $1,583.70 earlier.

Gold prices have spiked since the U.S. airstrike near Baghdad airport on Friday that killed Qassem Soleimani, the commander of Iran’s Revolutionary Guards’ Quds force.

“Additional escalation in U.S.-Iranian tensions could further boost gold prices,” Jeff Currie, head of commodities research at Goldman, said in a note.

“We found that spikes in geopolitical tensions lead to higher gold prices when they are severe enough to cause currency debasement,” Currie added. “This most often happens during wars or military escalations.”

The U.S. dollar index, measured against a basket of six currencies, plummeted to a 6-1/2 month low of 96.23. On Wall Street, all three major stock indexes opened lower before rebounding on the performance of technology stocks such as Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL). Oil prices hit near four-month highs, with global crude benchmark Brent crossing the key $70-per-barrel mark.

The Middle East remained on high alert on Monday as Iran and the United States exchanged strike threats. Tehran’s Supreme Leader Ayatollah Ali Khameini vowed “harsh revenge” for Soleiman’s killing while U.S. President Donald Trump said he has identified 52 targets in Iran, including sites of cultural prominence, in a plan for a counter attack that may be “disproportionate.”

Iran also said it was abandoning limits to uranium enrichment, a step required for making nuclear weapons. Iraq’s parliament, meanwhile, voted to expel U.S. forces from the country, prompting Trump to threaten Baghdad with sanctions. Rockets also fell all over Iraq on Monday, with no human casualties reported. Separately, fighting broke out in Libya.

“Gold is the favored haven to preserve assets and purchasing power especially in times of stress in other markets,” said George Gero, precious metals analyst at RBC Wealth Management in New York.

“I’m looking for $1,600 longer term as more headlines unfold here, including political and economic surprises,” he added.

Gero said some profit taking was likely by next week if China went ahead to sign the phase one trade deal with the U.S. that Trump said will happen on Jan. 15.

Yet, longer term holders of gold “are now more convinced that some haven is needed,” he said.