Bullion prices continued their deep decline since early March to a record low of around $4,100 reached last November following Donald Trump's continued attacks on Iranian energy sites.
At 9.30 am, gold prices were at $4,358, down 1.10% since it opened in early trading on Tuesday in the Asian session.
Market sentiment remained positive after Donald Trump stated that negotiations between the United States and Iran were going well and productively.
Although the report was questioned by Iranian media, diplomatic developments were still ongoing when several countries including Turkey, Egypt and Pakistan reportedly held separate meetings with representatives from both sides.
This development weighed on global oil prices, with a drop of around 10% to a weekly low as risk appetite increased. The effect also supported a positive opening on Wall Street.
Meanwhile, the US Dollar weakened 0.18% in line with its short-term correlation to WTI crude oil prices, as reflected by the US Dollar Index.
The index recovered from a daily low of 98.88 to around 99.32, but remained below the opening price. A decline was also seen in US government bond yields as the 10-year note yield fell to around 4.34%, supporting demand for gold as a safe-haven asset.
Meanwhile, the head of the International Energy Agency, Fatih Birol, stressed that the current crisis in the Middle East is having a major impact on energy markets, exceeding even the combined oil shocks of the 1970s and the impact of the Russo-Ukrainian War on gas markets.
On the US economic front, the absence of major data did not prevent statements from Federal Reserve officials from continuing to drive the market.
Chicago Fed President Austan Goolsbee said that the potential for a rate cut still depends on inflation progress, while warning that energy price pressures remain a major risk to the economy.
Meanwhile, Fed Governor Stephen Miran said it was too early to assess the impact of the energy price shock on inflation. He did, however, maintain that monetary easing could be needed to support labor market strength.
