PRECIOUS-Gold extends decline as inflation worries linger, Fed meeting looms

By Ashitha Shivaprasad

April 29 (Reuters) - Gold prices fell for a third straight session on Wednesday, as inflation worries tied to the ongoing conflict in the Middle East clouded the outlook for monetary policy, while the spotlight was also on the Federal Reserve's rate decision later in the day.

Spot gold XAU= was down 1% at $4,550.39 per ounce, by 11:37 a.m. EDT (1537 GMT), after hitting a one-month low. U.S. gold futures GCcv1 fell 1% to $4,563.30.

"We are seeing some positioning ahead of this afternoon's FOMC decision. Rising U.S. Treasury yields and higher crude oil prices, which is causing inflation worries, have also been bearish for the gold market," said Jim Wyckoff, senior analyst at Kitco Metals.

Gold is known as an inflation hedge, but the non-yielding metal's appeal dims if central banks raise interest rates.

Donald Trump discussed how to mitigate the impact of a possible months-long U.S. blockade of Iran's ports with U.S. oil companies, as the U.S. president urged Tehran to sign a deal. Tehran warned of "unprecedented military action" against continued U.S. blockading.

The war has sent oil prices soaring, with Brent hitting a one-month high amid concerns about supply disruptions, while U.S. Treasury yields ticked higher. O/R US/

The Federal Reserve’s policy decision is due at 2 p.m. EDT (1800 GMT), with expectations that rates will be held steady. Fed Chair Jerome Powell is scheduled to hold a press conference half an hour later, in what could be his final meeting as head of the Fed. Kevin Warsh, Trump's pick to lead the Fed, cleared a key procedural hurdle.

"Today's meeting may be uneventful because no rate changes are expected. Of course, any surprises coming from Powell would be market sensitive," said Wyckoff.

Elsewhere, the World Gold Council said global gold demand rose 2% year-on-year 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, outweighed a 23% decline in jewellery demand.

Among other metals, spot silver XAG= fell 1.8% to $71.75, platinum XPT= fell 2.8% to $1,886.53, and palladium XPD= eased 0.1% at $1,458.75.