Gold edges up as Brent eases, Mideast developments in focus ahead of Fed meet

Gold edged up 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 was up 0.1% at $4,052.78 per ounce by 4:10 p.m.

EDT (2010 GMT), after falling about 2% in the previous ‌session.

Prices were ⁠up ⁠0.9% for the week so far, supported by dip-buying earlier in the week.

U.S. gold futures for August delivery settled 0.5% higher at $4,070.80.

"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.

Brent crude oil prices fell over 4%, 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] 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.

Traders are pricing in about an 82% chance of a U.S. rate hike in September, ⁠according to the CME FedWatch Tool. [FEDWATCH] "Recent strength in bullion appears driven largely by dip-buying and short covering.

This follows the sharp correction from record highs earlier this year ...

Elevated oil prices and rising yields are likely to cap any recovery, leaving $4,000 as the key near-term level to watch," analysts at ING said in a note.

Among other metals, spot silver rose 0.8% to $58.11 per ounce, platinum fell 0.8% to $1,587.17, and palladium fell 1.4% to $1,239.20. ...