Gold prices advanced more than 1% on Tuesday, driven by renewed optimism that diplomatic mediation in the Middle East could de-escalate regional tensions.
The move reflects a shift in market sentiment as investors weigh the potential for a breakthrough in talks between the United States and Iran, which would likely dampen energy price spikes and reduce the urgency for higher-for-longer interest rates.
The precious metal's gain follows a period of volatility, with spot gold previously climbing 1.2% to $4,750 per ounce amid similar speculation about a U.S.-Iran deal.
Global financial markets had also surged earlier in the week after confirmation of a mutual understanding agreement between the two nations, signaling a significant reduction in immediate geopolitical risk.
This backdrop has reinforced the narrative that a diplomatic resolution could ease inflationary pressures linked to energy costs, thereby supporting risk assets and precious metals alike.
Analysts note that the interplay between geopolitical risk and monetary policy expectations remains a key driver for gold.