Gold steady, awaiting clarity on Fed rates policy, Middle East conflict

Gold prices were steady on Tuesday as investors grappled with uncertainty over the Federal Reserve's interest-rate path and monitored ongoing developments in the Middle East for signs of a diplomatic resolution to the Iran war. Spot gold was little changed at $4,053.40 per ounce by 1058 GMT, while U.S. gold futures were up 0.6% at $4,114.30. "Gold prices have been stuck in a narrow range over the past few weeks, trading roughly between $4,000 and $4,100, as investors remain uncertain about the Federal Reserve's interest rate path," said ActivTrades senior analyst Ricardo Evangelista. "The past 24 hours have done little to change that picture." Federal Reserve Bank of New York President John Williams said he remained optimistic that inflation pressures were on track to ease gradually, but if they do not, the U.S. central bank will not hesitate to respond with rate hikes. Traders currently price in a 63% chance of a rate hike in September after a divided Fed kept rates unchanged at its last policy meeting. Markets are looking out for U.S. labour market data due this week, including job opening data later in the day, the ADP employment report on Wednesday and nonfarm payrolls figures on Friday. On the geopolitical front, conflicting signals from the U.S. and Iran over the status of talks to end their five-month-old war boosted uncertainty on Tuesday, with the latest attack on shipping in the Strait of Hormuz highlighting risks to global energy flows. Rising energy costs linked to the conflict have heightened inflation worries, raising the prospect of tighter monetary policy by the U.S. Fed. Bullion, which is a non-yielding asset, tends to lose appeal when interest rates rise. "Over the longer term, the outlook for gold remains positive, supported by rising global debt levels, persistently elevated inflation, continued central bank purchases and constrained mine supply growth," Evangelista said. Spot silver gained 1.1% to $58.83 per ounce, platinum firmed 2.2% to $1,663.13 and palladium rose 1.9% to $1,288.32.