Gold rebounded on Tuesday from a near one-week low hit the day before, as oil prices fell on hopes of further US-Iran peace talks, easing inflation fears.
Spot gold was up 0.6% at $4,768.19 per ounce, as of 0237 GMT, after hitting its lowest level since April 7 in the previous session.
US gold futures for June delivery rose 0.5% to $4,790.70.
Oil prices fell below $100 a barrel as signs of potential US-Iran dialogue to end their war eased concerns about supply risks stemming from the US blockade of the Strait of Hormuz.
Higher crude prices feed into inflation by raising transportation and production costs.
While inflation typically boosts gold’s appeal as a hedge, elevated interest rates weigh on the non-yielding metal’s demand.
Markets appear to think that there’s still time for a deal between the United States and Iran, said Ilya Spivak, head of global macro at Tastylive.
Reuters reported negotiations between Washington and Tehran were still alive while US Vice President JD Vance said in an interview the US expected Iran would make progress on opening the Strait of Hormuz.
Meanwhile, the US military began a blockade of Iran’s ports on Monday, President Donald Trump said, and Tehran threatened to retaliate against its Gulf neighbours’ ports after weekend talks in Islamabad on ending the war broke down.
Additionally, the US dollar hovered near its lowest level in more than a month, making the greenback-denominated gold more affordable for holders of other currencies.
“Near-term, a thin macro calendar might make US-Iran headlines the driving engine.
That sets the stage for choppy price action for now,“ Spivak said, adding that gold could face resistance around $4,850 levels. Traders now see a 29% chance of a 25-basis-point US rate cut this year, up from about 12% last week.
Before the war, there were expectations of two cuts for this year.
Among other metals, spot silver rose 0.9% to $76.27 per ounce, platinum gained 0.1% to $2,071.75, and palladium was up 0.2% at $1,576.23.
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