(Reuters) - Gold rebounded from a more than one-week low on Monday, as oil prices fell after Iran cited progress in U.S.-Iran peace talks, though bets of higher interest rates after hawkish U.S. Federal Reserve signals limited the metal's gains.
Spot gold was up 0.4% at $4,176.34 per ounce, as of 0424 GMT, after falling to its lowest level since June 11 on Friday. U.S. gold futures for August delivery fell 1.2% to $4,194.40.
The first round of talks between high-ranking U.S. and Iranian officials in Switzerland ended Monday, with an Iranian foreign ministry spokesperson saying good progress has been made, according to Iran's Press TV.
A joint statement from mediating nations Qatar and Pakistan said the U.S. and Iran agreed to a roadmap toward a final deal within 60 days.
"The current situation in Switzerland is quite different from a few hours ago when the two sides were squabbling, but now it seems they're making some progress," said Edward Meir, an analyst at Marex.
"We're going to be trading on geopolitical guidelines for a little while longer, but the situation is fluid so perhaps best to watch the action from the sidelines for now."
Brent crude futures fell over 1% after the announcement. Elevated oil prices stoke inflation concerns and raise expectations of higher interest rates. Gold tends to lose appeal when rates are high, as it does not yield interest.
Meanwhile, Fed Chair Kevin Warsh's emphasis on inflation in last week's press conference, without any more-nuanced commentary about what might clear the bar for a rate hike, led investors to conclude an increase was coming soon.
Nine of the Fed's 19 policymakers believe they will need to raise the policy rate this year.
Spot silver rose 1% to $65.53 per ounce, platinum fell 0.3% to $1,659.40, and palladium was up 0.6% at $1,265.12.