Gold prices rose more than 1% on Tuesday as investors weighed diplomatic efforts to ease the U.S.-Iran conflict, which could temper oil-driven inflation risks and influence ‌the U.S. ⁠Federal Reserve's ⁠interest rate path. Spot gold rose 1.6% to $4,071.59 per ounce by 0750 GMT. U.S. gold futures for August delivery were up 1.5% at $4,076.00. "It looks like gold is trying to find a base somewhere around this ($4,000) level and is going to try to re-engage the upside from there," said Ilya Spivak, head of global macro at Tastylive. "These headlines from the Middle East seem to have ⁠some degree of ‌knock-on, though it is increasingly only being paid attention to in a passing kind of way." Oil prices softened on Tuesday, ⁠with markets weighing reports of mediation efforts between the U.S. and Iran against an exchange of fresh attacks between the two and threats of a naval blockade of Saudi Arabia by Yemen's Houthis. A senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire in efforts to salvage the interim deal, intended to pave the way to a lasting agreement to ‌end the war. The recent escalation in the conflict drove oil prices to a more than one-month high on Monday, with a growing chorus of U.S. policymakers ⁠arguing interest rates may need to rise to counter persistent inflation. High interest rates increase the opportunity cost of holding non-yielding bullion. While the Federal Reserve is widely expected to keep interest rates unchanged next week, traders are pricing in a 64% chance of a hike in September, according to the CME FedWatch Tool. Spot silver gained 4.5% to $58.96 per ounce, platinum was up 2.3% at $1,630.21 and palladium rose 2.8% to $1,288.02.