Gold prices edged lower on Wednesday, retreating from recent highs as the United States dollar regained strength and investors adopted a cautious stance ahead of potential renewed peace talks between the United States and Iran.
Spot gold fell 0.4% to US$4,820.11 per ounce by 4:05pm AEST (6:05 am GMT), pulling back from a four-week high of US$4,871 reached earlier in the Asian session.
The decline comes as the U.S. dollar found support after falling to six-week lows, dampening demand for bullion despite ongoing geopolitical uncertainty.
Market sentiment has been underpinned by cautious optimism surrounding diplomatic efforts. U.S. President Donald Trump said earlier this week that talks with Iran could resume within days, raising hopes of a potential resolution to the conflict.
At the same time, signs of stabilisation in the Strait of Hormuz, alongside the impact of a U.S. naval blockade, have contributed to a pullback in oil prices, easing inflation concerns and reducing demand for safe-haven assets such as gold.
Despite the improvement in risk sentiment, investors remain cautious amid reports of a potential second round of U.S.-Iran negotiations.
Additional concerns have also emerged after reports that Iran is working to restore access to its underground missile infrastructure during the ceasefire period, according to satellite imagery reviewed by CNN.
