Bullion traded near US$4,665 an ounce, having slipped 0.6% on Monday.

“US President Donald Trump convened a meeting of national security officials to discuss Iran’s latest peace proposal but maintained red lines on any deal to end the conflict,” White House press secretary Karoline Leavitt said.

The comments followed reports that Tehran proposed an interim deal whereby it reopens the Strait of Hormuz in exchange for Washington ending its blockade of ships moving to and from Iranian ports.

The standoff has reduced daily transits via the strategic waterway to near zero, choking off flows of crude, natural gas and oil products.

The Iranian proposal would also postpone more complex negotiations over the country’s nuclear programme.

The indefinite extension of the ceasefire, with Hormuz still blocked, “prolongs market uncertainty,” Marc Loeffert, a trader at Heraeus Precious Metals, said in a note.

“In the long run, the combination of economic stagnation and rising prices could provide fertile ground for the gold bull market to continue,” he said.

Traders will be keeping tabs on interest rate decisions in the US, the EU, the UK and Canada this week.

Earlier Tuesday, the Bank of Japan left its benchmark rate unchanged at 0.75%, with a split vote suggesting increased odds of a hike in June.

The energy-supply shock caused by the eight-week conflict has added to inflation risks, raising the likelihood that central banks will keep rates steady for longer or even hike them, which is a headwind for non-yielding bullion.

Gold has lost nearly 12% since the conflict began at the end of February.

Spot gold was down 0.3% at US$4,667.04 an ounce at 12:27pm in Singapore.

Silver fell 1.3% to US$74.55 an ounce. Both platinum and palladium edged lower.

The Bloomberg Dollar Spot Index, a gauge of the US currency, was flat after dipping 0.1% on Monday.