Gold eases on higher oil prices, markets await Powell's remarks

Gold edged lower on Wednesday, as higher oil prices fuelled fears of inflation, while investors awaited U.S. Federal Reserve Chair Jerome Powell's comments to gauge the impact of the Iran war on the economy. Spot gold was down 0.4% at $4,574.26 per ounce, as of 0740 GMT, after falling to its lowest level since April 2 in the previous session. U.S. gold futures for June delivery fell 0.4% to $4,587.70. Brent crude oil rose above $112 a barrel on reports that the U.S. will extend its blockade of Iranian ports. Efforts to end the Iran conflict were at an impasse with U.S. President Donald Trump unhappy with the latest proposal from Tehran. Higher oil prices fuelled "the idea that costlier energy will translate into inflation, steering central banks, and especially the Fed, in a more hawkish direction," said Ilya Spivak, head of global macro at Tastylive. While gold is traditionally seen as a hedge against inflation, high interest rates weigh on its appeal as a non-yielding asset. Investors expect the Fed to hold interest rates steady at the end of its two-day meeting later in the day. "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 Spivak. Meanwhile, global gold demand rose 2% year-on-year to 1,230.9 metric tons in the first quarter of 2026 as a surge in purchases of gold bars and coins, as well as a 3% growth in buying by central banks, offset a 23% decline in jewellery demand, the World Gold Council said on Wednesday. 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 was steady at $73.12 per ounce, platinum fell 0.6% to $1,927.70, and palladium was down 0.4% at $1,453.63.