Gold prices edged higher on Tuesday, recovering from a near one-week low recorded in the previous session, as declining oil prices reduced inflation worries amid renewed hopes of U.S.-Iran peace talks.

Spot gold climbed 0.6% to $4,768.19 per ounce as of 0237 GMT, after hitting its lowest level since April 7 on Monday. U.S. gold futures for June delivery also gained 0.5% to $4,790.70.

Oil prices slipped below $100 per barrel on indications that the United States and Iran may resume dialogue to end their conflict, easing fears of supply disruptions linked to the U.S. blockade of the Strait of Hormuz.

Typically, rising crude prices drive inflation by increasing transportation and production costs. While inflation tends to boost gold's appeal as a hedge, higher interest rates often dampen demand for the non-yielding metal.

"Markets appear to think that there's still time for a deal between the United States and Iran," said Ilya Spivak, head of global macro at Tastylive.

Meanwhile, U.S. President, Donald Trump announced that the military had commenced a blockade of Iran's ports on Monday, while Tehran warned it could retaliate against ports in neighbouring Gulf states after talks in Islamabad collapsed over the weekend.

The U.S. dollar hovered near a more than one-month low, making gold—priced in dollars—more attractive to investors using other currencies.

"Near-term, a thin macro calendar might make U.S.-Iran headlines the driving engine. That sets the stage for choppy price action for now," Spivak said, adding that gold could face resistance around $4,850 levels.

Traders now assign a 29% probability to a 25-basis-point U.S. rate cut this year, up from roughly 12% last week.

Prior to the conflict, markets had anticipated two rate cuts in 2026.

Among other precious metals, spot silver rose 0.9% to $76.27 per ounce, platinum gained 0.1% to $2,071.75, and palladium advanced 0.2% to $1,576.23.