(Reuters) - Gold gained for a fifth consecutive session on Wednesday as optimism over a U.S.-Iran peace agreement eased expectations of U.S. interest rate hikes, while investors awaited further details on the deal and the Federal Reserve's policy meeting.
Spot gold was up 0.3% at $4,341.12 per ounce, as of 0230 GMT, trading near a one-week high hit on Monday. U.S. gold futures for August delivery rose 0.2% to $4,361.10.
Details of a U.S.-Iran interim deal to end the Middle East conflict are emerging, with U.S. President Donald Trump saying it would rule out a nuclear weapon for Tehran and a U.S. official saying it would allow Iran to sell oil once signed.
Oil prices hovered around a three-month low on news that Iranian fuel may soon hit global markets, easing inflationary concerns.
"The pullback in oil prices has eased some upward pressure on interest rates and cooled rate-hike expectations. However, the rally (in gold) is losing some steam as all eyes turn to the monetary policy announcement from the Fed," said Ilya Spivak, head of global macro at Tastylive.
Investors turn their focus to U.S. Fed policy decision and remarks, due later in the day, with rates widely expected to remain unchanged.
"This marks the first FOMC meeting to be chaired by Kevin Warsh and traders still seem unsure about how he will reconcile a hawkish record, rising inflation, and pressure from a White House demanding a dovish pivot," Spivak said.
Gold loses its appeal when rates are high, as it does not yield interest.
"Over the longer term, structural support (for gold) is expected to persist, driven by ongoing Asian demand and continued central bank purchases as a hedge against geopolitical and policy risks," Westpac analysts wrote in a research note.
Other precious metals also extended gains, with spot silver rising 0.3% to $70.38 per ounce, platinum rose 0.5% to $1,812.80, and palladium was up 0.3% at $1,355.65.