Gold climbs to two-week high as investors watch Middle East conflict

Gold climbed to a two-week high on Wednesday, supported by technical buying and safe-haven demand, as investors monitored diplomatic efforts to moderate the Middle East conflict and braced for next week's U.S. Federal Reserve meeting for clues on the interest-rate outlook.

Spot gold XAU= rose 1.1% to $4,121.90 per ounce by 1200 GMT, having hit its highest level since July 7 earlier in the day. U.S. gold futures GCcv1 for August delivery gained 1.3% to $4,128.00.

"Concerns that higher oil prices could fuel inflation and keep interest rates higher for longer are being offset by safe-haven demand and hopes that ongoing diplomatic efforts between the U.S. and Iran could still lead to a de-escalation of the conflict, easing pressure on oil prices," said Ricardo Evangelista, senior analyst at ActivTrades.

The current rebound in prices is likely to face headwinds from volatile energy prices, but the $4,000 per ounce level continues to provide strong technical support, he added.

Earlier on Wednesday, U.S. Secretary of State Marco Rubio said Washington is willing to negotiate an end to the Iran crisis but that Tehran is not serious about talks.

Meanwhile, three oil tankers loaded with Saudi crude for China and India reversed course in the Red Sea on Tuesday after threats from Yemen's Iran-aligned Houthis, sending oil prices higher. O/R