PRECIOUS-Gold extends fall after US Fed keeps rate unchanged

* Trump urges Iran to sign a deal and discusses prolonged blockade

* Traders stick to bets the Fed will leave rates on hold well into next year

* Total gold demand up 2% y/y in Q1, WGC says (Updates after US Fed decision)

By Ashitha Shivaprasad

April 29 (Reuters) - Gold extended losses to fall to a one-month low on Wednesday as the U.S. Federal Reserve kept rates unchanged as expected and traders were concerned about inflation stemming from the war in the Middle East.

Spot gold was down 1.4% at $4,528.17 per ounce by 2:14 p.m. EDT (1814 GMT), its lowest level since late March. U.S. gold futures settled 1% lower at $4,561.50.

The Fed held interest rates steady, but in its most divided decision since 1992 noted rising concerns about inflation in a policy statement that drew three dissents from officials who no longer feel the U.S. central bank should communicate a bias towards lowering borrowing costs.

"Three dissents who wanted to take the easing bias out of the statement is putting gold under some pressure," independent metals trader Tai Wong said.

Traders stuck to bets the Fed will not cut interest rates this year or well into the next, after the decision. Inflation fears have flared up with global oil prices trading above $100 a barrel due to the U.S.-backed war against Iran.

"Only Trump and Iran can rescue markets, but the two sides are not getting any closer to a deal and oil is reflecting that. Against this backdrop, the gold outlook is not looking so bright right now," said Fawad Razaqzada, market analyst at City Index and FOREX.com.

Donald Trump discussed how to mitigate the impact of a possible months-long U.S. blockade of Iran's ports with U.S. oil companies, a White House official said on Wednesday, as the U.S. president urged Tehran to sign a deal. Tehran warned of "unprecedented military action" against continued U.S. blockading.

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 2.7% to $71.08, platinum fell 3% to $1,881.21, and palladium eased 0.4% at $1,454.52. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Ronojoy Mazumdar, Aurora Ellis and Sahal Muhammed)