PRECIOUS-Gold steady near two-week highs on MidEast de-escalation reports

By Noel John

April 1 (Reuters) - Gold held steady on Wednesday after hitting a two-week high as investors awaited further clarity on reports of de-escalation in the Middle East conflict following U.S. President Donald Trump's statement that the war with Iran could wind down in weeks.

Spot gold XAU= edged up 0.2% to $4,678.36 per ounce by 0507 GMT, having hit its highest level since March 20 at $4,723.21 earlier in the day.

U.S. gold futures GCcv1 for April delivery gained 0.8% to $4,713.40.

Trump said Tehran did not have to make a deal as a prerequisite for the conflict to wind down and that he would provide an update on Iran in an address at 9 pm EDT on Wednesday (0100 GMT on Thursday).

"Market remains cautious about over-interpreting the de-escalation remark as a clean pivot... We've already seen multiple rounds where talks appeared constructive before stalling," said Christopher Wong, a strategist at OCBC.

Gold fell more than 11% in March in its steepest monthly fall since October 2008 as elevated oil prices fuelled inflation concerns and bets of a hawkish monetary policy response.

Oil prices gained despite hopes of potential de-escalation in the Iran conflict as infrastructure damage is likely to keep supplies tight. The U.S. dollar retreated from highs, making bullion more affordable for holders of other currencies. USD/MKTS/GLOB

"The upside (to gold prices) is being limited due to the fact that interest rates can move higher if inflationary expectations reignite," said Marex analyst Edward Meir.

While gold is often used as a hedge against inflation and geopolitical risks, high interest rates make the non-yielding bullion less attractive among investors.

"Should geopolitical tensions de-escalate further, then expectations for Fed easing could return. In such a scenario, real yields can ease, providing support for gold," said Wong of OCBC.

Spot silver XAG= fell 1.1% to $74.31 per ounce, platinum XPT= gained 0.2% to $1,952 and palladium XPD= was up 0.2% at $1,478.96.