Gold Edges Up as Brent Crude Retreats Amid Middle East Tensions

Gold prices edged up on Friday as Brent crude oil retreated from above $100 a barrel. The rise in gold came despite expectations of higher interest rates, which typically weigh on non-yielding metals like gold. Investors were assessing developments in the Middle East conflict and their implications for inflation ahead of the U.S. Federal Reserve's policy meeting next week.

The Fed is largely expected to keep interest rates unchanged next week, with traders pricing in an 82% chance of a rate hike in September, according to the CME FedWatch Tool. Gold prices have 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.

Spot gold was up 0.1% at $4,052.78 per ounce, while U.S. gold futures for August delivery settled 0.5% higher at $4,070.80. Analysts at ING noted that recent strength in bullion appears driven largely by dip-buying and short covering.