Treasury Secretary Steven Mnuchin has said it is a US “national security priority” to relocate its embassy in Israel from Tel Aviv to Jerusalem.
Mr Mnuchin was speaking on Monday at an event in Jerusalem ahead of the opening ceremony for the new embassy.
US President Donald Trump’s decision in December to go forward with a campaign promise to move the embassy was welcomed by Israel and condemned by the Palestinians.
Mr Trump’s Mid-east peace negotiator Jason Greenblatt stated on Twitter that “the long-overdue step of moving our embassy is not a departure from our strong commitment to facilitate a lasting peace deal”.
However, a senior aide to Palestinian President Mahmoud Abbas said that the decision violated a promise to hold off on moving the embassy to give peace talks a chance.
Saeb Erekat told the Voice of Palestine radio that the US administration is “based on lies” and that Washington “is no longer a partner” in peace talks.
He claimed that the Trump administration has “become part of the problem” and that the US president’s Mid-east team is unqualified.
Turkish president Recep Tayyip Erdogan also condemned the move, saying the US had disregarded “rights and justice” as well as ignoring the international community.
He added that the US switch serves to “reward” the Israeli government despite it undermining efforts to resolve the decades-long conflict, while it “punished” Palestinians.
Israel captured east Jerusalem in the 1967 Mideast war and annexed it in a move not recognised internationally.
The Palestinians want east Jerusalem as the capital of their future state. They view the relocation as a one-sided move that invalidates America’s role as an impartial peace broker.
Meanwhile, Israeli troops firing from across a border fence shot and wounded two Palestinians as a protest near the Gaza border gets under way.
Gaza residents streamed to the border area on Monday for what is intended to be the largest protest yet against a decade-old blockade of the territory. Israel’s military says it will stop a possible border breach at all costs, warning protesters that they are endangering their lives.
Near Gaza City, hundreds gathered about 150 metres from the fence. A reporter witnessed two people being shot in the legs.