Gold prices rose on Tuesday after falling to their lowest level in nearly a week a day earlier, supported by a drop in oil prices amid growing hopes for renewed peace talks between the United States and Iran, which helped ease inflation fears.

In spot trading, gold gained 0.6 percent to 4,768.19 dollars per ounce as of 02:37 GMT, after touching its lowest level since April 7 in the previous session. US gold futures for June delivery also increased by 0.5 percent to 4,790.70 dollars.

Oil prices slipped below 100 dollars per barrel as expectations of possible talks between Washington and Tehran to end their conflict reduced concerns over supply disruptions linked to the US blockade of the Strait of Hormuz.

Higher oil prices typically fuel inflation by pushing up transportation and production costs. Although inflation usually supports gold as a safe haven, higher interest rates tend to weigh on demand for the metal, which does not generate returns.

Ilya Spivak, head of global macro at Tastylive, said markets appear optimistic that there is still enough time to reach an agreement between the United States and Iran.

Reuters reported that negotiations between Washington and Tehran are still ongoing, while US Vice President J.D. Vance said in an interview that the United States expects Iran to make progress on reopening the Strait of Hormuz.

At the same time, President Donald Trump indicated that the US military began a blockade of Iranian ports on Monday, while Tehran threatened to retaliate by targeting ports in neighboring Gulf countries after talks held earlier in the week in Islamabad to end the war failed.

Meanwhile, the dollar hovered near its lowest level in more than a month, making gold priced in the currency cheaper for holders of other currencies.

Traders now see a 29 percent chance of a 25 basis point US interest rate cut this year, up from about 12 percent last week. Before the war, markets had been expecting two rate cuts this year.

As for other precious metals, spot silver rose 0.9 percent to 76.27 dollars per ounce, platinum gained 0.1 percent to 2,071.75 dollars, and palladium increased 0.2 percent to 1,576.23 dollars.