Gold prices rose more than 1% on Tuesday, extending the rally that began after a diplomatic breakthrough between the United States and Iran was confirmed on Monday.
The precious metal's advance reflects growing investor confidence that renewed mediation efforts in the Middle East could stabilize regional tensions and prevent a spike in energy costs.
The move in gold underscores a shift in market sentiment regarding interest rate policy.
With the risk of a geopolitical shock to oil supplies diminishing, traders are increasingly pricing in a lower probability of persistent inflation driven by energy prices.
This dynamic reduces the pressure on central banks to maintain restrictive monetary policy for an extended period, a development that typically supports non-yielding assets like gold.
The current rally follows a broader surge in global financial markets on Monday, which reacted positively to the mutual understanding agreement between Washington and Tehran.