On Tuesday, hundreds of people in Tel Aviv marched and blocked traffic after Israeli forces fired on largely unarmed Palestinian protesters in Gaza on Monday, killing around 60 people and injuring hundreds more.
"Those who suggest that the Gaza violence has anything to do with the location of the American embassy are sorely mistaken".
Violent demonstrations have erupted across Israel and the Palestinian territories as the US officially moved its embassy from Tel Aviv to the disputed city of Jerusalem, which Palestinians also claim as their capital.
The Gaza health ministry, which provided the toll from Monday's violence, said a nine-month-old girl died from tear gas exposure, but medical officials later cast doubt on that claim, saying the infant had a pre-existing medical condition.
There are a lot of diplomatic I-told-you-so's rocketing into Washington from around the world right now.
The chairperson reiterated the solidarity of the AU with the Palestinian people in their legitimate quest for an independent and sovereign State with East Jerusalem as its capital.
But the Palestinian delegation in Ottawa called the USA embassy move "unilateral and illegal" and Israel's military response to the protests an "immoral act" that relied on "excessive force".
He told BBC Radio 4′s Today programme Israel "did everything we could" to avoid the bloodshed at the border with Gaza, which saw soldiers open fire on protesters.
At a special meeting of the United Nations Security Council on Wednesday morning (AEST), Ms Haley denied the violence in Gaza was a response to the new USA embassy, saying the blame laid with the Palestinian Hamas party.
The Palestinians seek Israeli-annexed east Jerusalem as a capital.
The military has said presumably less lethal rubber-coated steel pellets are not effective in keeping demonstrators from the fence.
Israel's leader also accused the Islamist movement Hamas which rules Gaza of deliberately putting civilians in the line of fire for political gain.
"Such violence is destructive to peace efforts and we call on all sides to show restraint", she said.
"There is no way to identify who is who, and this is why Hamas is using those civilians - women and children - to cover its terrorist action and its attempt to destroy the barrier we are building", he said.
Nikki Haley, the US ambassador to the United Nations, defended Israel's response to Monday's violent protests on Tuesday, which erupted following the opening of the newly moved United States Embassy in Jerusalem.