Gold holds steady as investors eye Middle East developments ahead of Fed rate decision

Brent crude oil prices fell over 3%, after rising over 7% to settle above $100 in the previous session for the first time since May after Iran-aligned Houthis said they struck two Saudi oil tankers in the Red Sea. O/R

Among other metals, spot silver XAG= rose 0.4% to $57.92 per ounce, platinum XPT= fell 1.3% to $1,582.40, and palladium XPD= lost 1% to $1,244.24.

Gold held steady on Friday as Brent crude retreated from above $100 a barrel, while investors assessed developments in the Middle East conflict and their implications for inflation ahead of the U.S. interest rate decision next week.

Spot gold XAU= was unchanged at $4,046.10 per ounce by 09:17 a.m. EDT (1317 GMT), after falling about 2% in the previous session. The contract was up 0.7% for the week, supported by dip buying earlier in the week.

U.S. gold futures for August delivery GCcv1 gained 0.3% to $4,063.60.

"Gold and silver are carving out a base around $3,950 and $55, respectively, despite relentlessly higher yields. While a stop-loss move below can't be ruled out on a sharp war escalation, gold feels ready to move back higher... A Fed clearly on hold next week would help," said Tai Wong, an independent metals trader.

Bullion has fallen about 23% since the U.S.-backed war with Iran began in late February, pressured by expectations that war-driven inflation could keep interest rates higher for longer.

While gold is seen as a hedge against inflation, higher rates typically weigh on the non-yielding metal.

Investors now await the U.S. Federal Reserve's policy meeting outcome next week, when it is largely expected to keep rates unchanged.