Gold prices rebounded on Tuesday after hitting their lowest level in nearly a week in the previous session, supported by a decline in oil prices amid hopes for a resumption of peace talks between the United States and Iran, which helped to ease inflation fears.
Gold rose 0.5% in spot trading to $4,766.93 an ounce, after hitting its lowest level since April 7 in the previous session.
US gold futures for June delivery also rose 0.4% to $4,787.30.
This rise coincided with a drop in oil prices to below $100 a barrel, as concerns about supplies eased due to indications of possible dialogue between Washington and Tehran to end the conflict, despite the US blockade of the Strait of Hormuz.
High oil prices typically fuel inflation by increasing transportation and production costs. While inflation enhances gold's appeal as a safe haven, rising interest rates reduce demand for the non-yielding precious metal.
Ilya Spivak, head of global macroeconomics at Tasty Life, said markets appear optimistic about the possibility of an agreement between the United States and Iran, noting that there is still plenty of time to achieve this, according to Reuters.
According to reports, negotiations between the two sides are still ongoing, while US Vice President JD Vance expressed his expectation of progress regarding the reopening of the Strait of Hormuz.
In response, President Donald Trump announced that the US military had begun a blockade of Iranian ports on Monday, while Tehran threatened to retaliate by targeting ports in the Gulf states, following the failure of talks earlier in the week in Islamabad.
The dollar also stabilized near its lowest level in more than a month, making dollar-denominated gold less expensive for holders of other currencies, which supported demand for it.
Traders now see a 29% probability of a 25-basis-point cut in US interest rates this year, compared to about 12% a week ago, while pre-war forecasts pointed to two possible cuts.
As for the other precious metals, silver rose 2.11% in spot trading to $77.04 an ounce, while platinum climbed 0.1% to $2,071.75 and palladium rose 0.2% to $1,576.23.
