Negotiations between Israel and Hamas have made "a lot of headway" in key disputes, including halting the conflict and the logistics of how Israel will withdraw its military from the region.
Within Gaza, Israel has dialled down its military campaign at US President Donald Trump's behest, but it has not halted strikes altogether.
But officials are hopeful the current peace talks in Egypt could lead to a ceasefire, if both sides can agree to certain terms, such as a swap deal of hostages and prisoners.
Trump's son-in-law Jared Kushner and special envoy Steve Witkoff have touched down for the talks, to meet with prominent leaders like Israeli strategic affairs minister Ron Dermer, a close confidant of Prime Minister Benjamin Netanyahu.
Also joining the discussions was the prime minister of longstanding mediator Qatar, Sheikh Mohammed bin Abdulrahman al-Thani, according to Egyptian sources.
Offering an upbeat assessment, Trump said a deal was "very close" and that he may travel to the Middle East this weekend, possibly leaving as soon as Saturday, if an agreement is reached.
"It's something I think that will happen, got a good chance of happening," he said at the start of a White House event, referring to the potential for a breakthrough, after he was briefed by his team in Egypt.
Talks have made 'a lot of headway'
Turkish foreign minister Hakan Fidan said the mediated negotiations between Israel and Hamas had made "a lot of headway" and that a ceasefire would be declared if they reached a positive outcome.
But crucial details are yet to be spelled out, including the timing, a post-war administration for the Gaza Strip, and the future of Hamas.
Gaza authorities say more than 67,000 people have been killed and much of the enclave has been flattened since Israel began its military response to the Hamas attack two years ago.
Around 1,200 people were killed and 251 were taken hostage back to Gaza, according to Israeli officials, with 20 of the 48 hostages still held believed to be alive.
Hamas said it had handed over its lists of hostages and Palestinian prisoners to be exchanged in a swap, and was optimistic about the talks so far.
The list of Palestinians Hamas wants freed is expected to include some of the most prominent prisoners ever jailed by Israel, whose release had been off limits in previous ceasefires.
According to a Palestinian source close to the talks, the list includes Marwan al-Barghouti, a leader of the Fatah movement, and Ahmed Saadat, head of the Popular Front for the Liberation of Palestine. Both are serving multiple life sentences for involvement in attacks that killed Israelis.
The group has so far refused to discuss Israel's demand that Hamas give up its arms, which the Palestinian source said Hamas would reject as long as Israeli troops occupy Palestinian land.
Two sources familiar with the talks confirmed that sticking points included the mechanism for the Israeli withdrawal, with Hamas seeking a clear timeline linked to the release of hostages and guarantees of a complete withdrawal by Israeli forces.
Meanwhile, Israel's campaign in Gaza has scaled back.
Israeli military said its forces had killed several militants in Gaza City, Gaza's main urban hub, who it said were on their way to attack Israeli soldiers.
Gaza medical authorities reported eight people killed in Israeli strikes in the last 24 hours, the lowest toll for weeks. Daily death tolls had been around 10 times as high over the past month as Israeli forces advance on Gaza City.
— With additional reporting from Reuters.
