Gold prices traded close to a two-week high on Thursday as markets balanced rising geopolitical tensions in the Middle East against growing expectations that higher energy prices could keep inflation elevated and influence the Federal Reserve's next policy decision.

Spot gold (XAU/USD) eased 0.1% to $4,127.99 per ounce, while Gold Futures declined 0.5% to $4,130.62. Silver (XAG/USD) added 0.3% to $59.88 per ounce, and platinum (XPT/USD) gained 0.8% to $1,658.28.

The precious metal remained close to recent highs after advancing roughly 3% over the previous two trading sessions.

Investors continued to monitor developments in the Middle East as hostilities between the United States and Iran showed little sign of easing.

Fresh attacks on commercial vessels in the Red Sea, claimed by Yemen's Houthi movement, raised additional concerns over the security of shipping routes used for Saudi Arabian oil exports.

The renewed geopolitical uncertainty helped keep crude oil prices elevated, reinforcing concerns that higher energy costs could prolong inflationary pressures ahead of next week's Federal Reserve meeting.

Higher inflation expectations could encourage policymakers to maintain a restrictive monetary policy stance, which typically reduces the appeal of non-yielding assets such as gold.

Markets remain divided over whether the Federal Reserve will raise interest rates again at its upcoming meeting, with limited guidance from Chair Kevin Warsh leaving investors uncertain about the policy outlook.

The central bank's decision and accompanying commentary are expected to play a key role in determining the near-term direction of precious metals.

Analysts at ANZ said investors have continued adding to gold holdings despite expectations that interest rates could remain elevated.

The bank noted that speculative long positions have climbed to their highest level since January, while inflows into gold-backed exchange-traded funds have strengthened as investors seek protection against expensive equity valuations.

According to ANZ, continued buying on market pullbacks has helped offset the traditional pressure that rising interest rates and stronger inflation expectations typically place on bullion.

Gold has remained above the key psychological level of $4,000 this week after retreating sharply from its record high in January, with traders now watching whether prices can challenge resistance near $4,200.

Gold price