Gold prices rose 1% on Tuesday, supported by a decline in oil prices that eased inflation concerns and reduced expectations of further U.S. interest rate hikes, as markets awaited additional signals on the future direction of Federal Reserve monetary policy.
Spot gold gained 1% to $4,092.43 per ounce, while U.S. gold futures climbed 1.5% to $4,149.50 per ounce.
Oil prices fell to their lowest levels in three weeks after comments from Qatari and U.S. officials raised hopes for a diplomatic resolution to the conflict involving Iran, potentially improving oil flows through the Strait of Hormuz.
Brent crude futures dropped by more than 4% following the news.
Higher energy prices typically reinforce expectations that the Federal Reserve will keep interest rates elevated for longer to combat inflation, a scenario that tends to weigh on gold, which does not generate interest income.
Traders are currently pricing in a 57% probability of a U.S. interest rate increase in September, after the Federal Reserve, despite internal divisions, left interest rates unchanged at its latest meeting.
Markets are also awaiting key U.S. labor market data this week, including job openings data later on Tuesday, the ADP employment report on Wednesday, and the closely watched nonfarm payrolls report on Friday.
Among other precious metals, spot silver rose 2.8% to $59.82 per ounce, platinum gained 7.1% to $1,745.42 per ounce, and palladium also climbed 7.1% to $1,355.13 per ounce.
