March 18 (Reuters) - Gold prices ticked down on Wednesday, as investors weighed the risk of a more hawkish U.S. Federal Reserve policy stance, with high oil prices increasing concerns over renewed inflation pressures.
Spot gold fell 0.6% at $4,976.12 per ounce as of 10:45 GMT. U.S. gold futures for April delivery dropped 0.6% to $4,979.20.
"Investors are worried about rates staying 'higher-for-longer' due to elevated energy prices ... the longer the Iran conflict goes on, the more likely that scenario," making non-yielding gold less attractive, said Jamie Dutta, market analyst at Nemo.money.
The Middle East conflict is in its third week, as Iran targeted Tel Aviv with missiles in what it said was retaliation for Israel's assassination of Iran's security chief Ali Larijani, Iranian state television reported on Wednesday.
Brent crude oil prices eased slightly, but held above $100 per barrel, as escalation in the Iran conflict and the ongoing closure of the Strait of Hormuz offset some relief to supply concerns.
Elevated oil prices add to inflationary pressures by pushing up transport costs. While gold is viewed as a hedge against inflation and uncertainty, high interest rates curb its appeal by raising the cost of holding bullion and boosting returns on yield-bearing assets.
The Fed is widely expected to hold rates steady for a second straight meeting when it announces its policy decision later in the day.
Investors are also awaiting remarks from Fed chair Jerome Powell to assess the central bank's policy view for the rest of 2026, with futures markets seeing only one quarter-percentage-point rate cut this year, in September, and another cut in late 2027.
"Long-term drivers like central bank buying, stagflation risks and diversification demand still remain. That should mean higher (gold) prices by end of 2026," Dutta added.
Spot silver rose 0.4% to $79.58 per ounce. Spot platinum was down 1.2% at $2,099.95, and palladium lost 0.2% to $1,597.92.
Reporting by Pablo Sinha in Bengaluru; Additional reporting by Sarah Qureshi; Editing by Louise Heavens
