Spot gold prices recovered on Monday, climbing 0.9% to $4,197.41 per ounce, reversing a slide that had pushed the metal to its lowest level since June 11.
The rebound coincided with a pullback in crude oil prices, as markets digested emerging reports of progress in peace negotiations between the United States and Iran.
The shift in geopolitical sentiment provided a tailwind for precious metals, which often benefit from risk-off flows but can also stabilize when acute supply-shock fears in energy markets subside.
As oil prices fell on the news of diplomatic progress, the immediate pressure on inflation expectations from energy costs eased, allowing gold to find support after its recent decline.
However, the rally was capped by persistent macroeconomic headwinds.
Bets on higher interest rates, fueled by recent hawkish signals from the US Federal Reserve, continued to weigh on the non-yielding metal.