Gold weakened on Tuesday amid optimism over a potential resumption of peace talks between Russia and Ukraine, dampening demand for protection against uncertainty.

Spot gold was quoted at USD3,238.47 an ounce on Tuesday early afternoon in London, down from USD3,241.64 at the same time on Monday. Silver inched down to USD32.53 an ounce from USD32.56.

Demand for safe-haven assets like gold subsided in Tuesday's session amid expectations that Kyiv and Moscow may restart ceasefire negotiations.

US President Donald Trump has said Russia and Ukraine will "immediately" begin ceasefire negotiations after what he described as an "excellent" call with Russian President Vladimir Putin that lasted more than two hours, PA reported.

Trump also spoke to Ukrainian leader Volodymyr Zelensky and European leaders in the hope of making progress toward a ceasefire.

"The conditions for that will be negotiated between the two parties, as it can only be, because they know details of a negotiation that nobody else would be aware of," Trump said in a social media post.

It was not clear when or where any talks might take place or who would participate.

The yellow metal also came under pressure from increasing outflows, DHF Capital's Bas Kooijman said.

Gold-backed exchange-traded funds recorded a net outflow of 30 tonnes last week, marking the largest withdrawal since September 2022, Kooijman noted.

"Persistent ETF outflows could signal waning institutional interest and could continue to weigh on gold in the near term," he cautioned.

But markets continue to price in at least two interest rate cuts in the US in 2025, following weaker-than-expected inflation and retail sales data, DHF Capital's Kooijman said.

"However, recent hawkish remarks from Fed officials have introduced caution around the timing and magnitude of policy easing," he said, adding: "This more measured stance may limit the upside potential for non-yielding assets like gold."

"Looking ahead, investor attention will turn to speeches from Fed policymakers, upcoming US economic data, including S&P Global's preliminary PMIs, and progress in geopolitical negotiations, all of which are likely to shape gold's short-term outlook," Kooijman said.

In other commodities, a barrel of Brent oil fetched USD65.42 on Tuesday, up from USD64.61 on Monday. West Texas Intermediate Crude rose to USD62.54 a barrel from USD61.71.

The oil market stabilised to a "certain extent", but could continue to see volatility risks, Exness analyst Inki Cho said, pointing to negotiations over Iran's nuclear programme, which appear stalled, raising supply fears.

"Without a deal, US sanctions on Iranian oil exports remain in place, preventing a potential increase in crude volumes available on the market," Cho said.

"Economic concerns, especially surrounding China and the US, remain a source of risks," the Exness analyst cautioned.

Cho added: "While Moody's recent downgrade of the US sovereign credit rating weighed on market sentiment, slowing industrial output and retail sales in China raised doubts about future oil demand."

The scheduled call between Trump and Putin does not appear to have led to any significant breakthroughs, ING analysts Warren Patterson and Ewa Manthey said.

"Trump said that Russia and Ukraine would begin talks on ending the war. However, Putin said the main aim remains to 'eliminate the root causes of the crisis,' Patterson and Manthey noted.

"Energy markets have been focused on potential peace talks, with an eventual deal possibly leading to an easing of sanctions against Russia," the ING analysts said.

Elsewhere, platinum was priced at USD1,013.56 an ounce on Tuesday, up from USD998.78 on Monday. Palladium was quoted at USD984.00 an ounce, up from USD965.16.

The copper price softened to USD9,517.00 per tonne from USD9,518.00, and aluminium slid to USD2,452.50 from USD2,469.00.

Sources: Fintel