PRECIOUS-Gold slips as oil prices fuel inflation fears ahead of Fed chair remarks

* Trump unhappy with latest Iran peace proposal

* FOMC decision due at 1400 GMT followed by Powell speech

* Global gold demand rose 2% y-o-y in Q1'2026 - World Gold Council (Updates for EMEA morning session)

By Pablo Sinha

April 29 (Reuters) - Gold prices slipped on Wednesday, as rising oil prices fuelled concerns of persistent inflation, with markets watching closely for remarks from U.S. Federal Reserve Chair Jerome Powell on the future path of interest rates.

Spot gold was down 0.3% at $4,579.34 per ounce, as of 0919 GMT, after falling to its lowest level since April 2 in the previous session. U.S. gold futures for June delivery fell 0.4% to $4,592.60.

Efforts to end the Iran conflict were at an impasse, as U.S. President Donald Trump was unhappy with the latest proposal from Tehran, which he said had informed the U.S. it was in a "state of collapse" and figuring out its leadership situation.

"Market sentiment has shifted toward skepticism regarding a potential U.S.-Iran agreement, reinforcing the 'higher-for-longer' interest rate narrative," said Zain Vawda, analyst at MarketPulse by OANDA.

The Fed is widely expected to hold interest rates steady at the end of its two-day meeting later today, while investors look out for comments from Powell on whether the central bank is looking for rate hikes later this year if inflation accelerates.

High interest rates weigh on gold's attractiveness as it's a non-yielding asset.

"Gold remains acutely sensitive to this shifting rate environment, which inflationary pressures from rising oil prices are currently exacerbating, Vawda said, adding that if the U.S. and Iran can reach a swift deal, bulls could return and push gold to finish the year between $5,300 and $5,500/oz.

Oil prices extended gains, as markets assessed a report stating that the U.S. will extend its blockade of Iranian ports, likely prolonging supply disruptions from the key Middle East producing region.

Global gold demand rose 2% year-on-year in the first quarter of 2026 as a surge in purchases of gold bars and coins, along with an increase in buying by central banks, offset a 23% decline in jewellery demand, the World Gold Council said on Wednesday.

Spot silver fell 0.2% to $72.92 per ounce, platinum fell 0.9% to $1,922.83, and palladium was down 0.6% at $1,451.46. (Reporting by Pablo Sinha in Bengaluru; editing by Philippa Fletcher)