Gold prices pushed higher during Asian deals on Tuesday after recovering from two-week lows reached last Friday, supported by easing oil prices and growing optimism that renewed diplomatic efforts could help de-escalate the conflict between the United States and Iran.
By 4:25 pm AEST (6:25 am GMT), spot gold was up 1.6% at US$4,070.77 per ounce.
Sentiment improved after reports that Iran's Foreign Ministry said on Monday that international mediators had presented "proposals" to Tehran, raising hopes that diplomatic channels remain open.
Meanwhile, U.S. Secretary of State Marco Rubio told CNN: "We are receiving signals through multiple channels of Iran’s desire to negotiate, but there is a growing split within the regime."
The renewed hopes for mediation came despite ongoing military exchanges between the United States and Iran.
Tensions also escalated after Yemen's Iran-backed Houthi movement announced a maritime blockade of Saudi Arabia, following the first direct exchange of fire between the two sides in years.
Additional support for gold came from an Axios report stating that President Donald Trump is nearing a decision between backing a 10-day ceasefire aimed at reopening the Strait of Hormuz or pursuing a broader joint military campaign with Israel against Iran, as U.S. forces continue to build up in the region while negotiations remain underway.
