Gold was largely steady on Wednesday, as investors awaited U.S. Federal Reserve Chair Jerome Powell's comments to gauge the impact of the Iran war on the economy as peace talks stall.
Spot gold was down 0.1% at $4,590.80 per ounce, as of 0611 GMT, after falling to its lowest level since April 2 in the previous session.
U.S. gold futures for June delivery fell 0.1% to $4,604. Investors expect the Fed to hold interest rates steady at the end of its two-day meeting later in the day, as war-driven energy shocks reignite already-elevated inflation.
"Much of the market's resilience since last April's tariff-driven panic has been built on the assumption that the Fed is ready to step in if conditions deteriorate. If it signals a high bar for such action, gold may extend lower," said Ilya Spivak, head of global macro at Tastylive.
Efforts to end the Iran conflict were at an impasse with U.S. President Donald Trump unhappy with the latest proposal from Tehran, which he said had informed the U.S. it was in a "state of collapse" and was figuring out its leadership situation.
Meanwhile, Brent crude oil remained above $111 a barrel on reports that the U.S. will extend its blockade of Iranian ports.
Higher crude prices add to inflationary pressures, increasing the likelihood of higher interest rates. While gold is traditionally seen as a hedge against inflation, high interest rates weigh on its appeal as a non-yielding asset.
Investors will also be focusing on other central bank decisions this week, including those from the European Central Bank, the Bank of England, and the Bank of Canada.
Goldman Sachs, in a note late Tuesday, said it still expects gold prices to reach $5,400 by the year-end as central bank diversification continues.
However, "gold remains vulnerable to further liquidation should Hormuz disruptions persist and bond, or equities, correct further," the bank added.
Spot silver rose 0.8% to $73.63 per ounce, platinum fell 0.3% to $1,934.40, and palladium was down 0.3% at $1,455.57. - Reuters
