PRECIOUS-Gold extends decline as inflation worries linger, Fed meeting looms

* Trump urges Iran to sign a deal

* Fed likely to hold rates steady

* Total gold demand up 2% y/y in Q1, WGC says (Updates for U.S. morning hours)

By Ashitha Shivaprasad

April 29 (Reuters) - Gold prices fell for a third straight session on Wednesday, as inflation worries tied to the ongoing conflict in the Middle East clouded the outlook for monetary policy, while the spotlight was also on the U.S. Federal Reserve's rate decision later in the day.

Spot gold was down 1.1% at $4,543.57 per ounce, as of 8:55 a.m. EDT (1255 GMT), a one-month low. U.S. gold futures fell 1.1% to $4,555.70.

"We are seeing some positioning ahead of this afternoon's FOMC decision. Rising U.S. Treasury yields and higher crude oil prices, which is causing inflation worries, have also been bearish for the gold market," said Jim Wyckoff, senior analyst at Kitco Metals.

Gold is known as an inflation hedge, but the non-yielding metal's appeal dims if central banks raise interest rates.

U.S. President Donald Trump urged Iran to 'get smart soon' and sign a deal, following days of deadlock in efforts to end the conflict in the Middle East and a media report that the U.S. would extend its blockade of Iran's ports.

The war has sent oil prices soaring, with Brent hitting a one-month high as concerns about supply disruptions persisted, while U.S. Treasury yields ticked higher.

The Federal Reserve's policy decision is due at 2 p.m. EDT (1800 GMT), with expectations that rates will be held steady. Fed Chair Jerome Powell is scheduled to hold a press conference half an hour later, in what could be his final meeting as head of the Fed.

"Today's meeting may be uneventful because no rate changes are expected. Of course, any surprises coming from Powell would be market sensitive," said Wyckoff.

Elsewhere, the World Gold Council said global gold demand rose 2% year-on-year in the first quarter of 2026 as a surge in purchases of gold bars and coins, as well as a 3% growth in buying by central banks, outweighed a 23% decline in jewellery demand.

Among other metals, spot silver fell 1.6% to $71.95 per ounce, platinum fell 2.1% to $1,900.11, and palladium was down 1.6% at $1,436.86. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Ronojoy Mazumdar)