By Yihui Xie and Preeti Soni

(Bloomberg) -- Gold wavered as traders assessed fragile optimism for a negotiated settlement to the war in the Middle East, despite the near-total blockade of energy flows via the Strait of Hormuz.

Bullion slipped as much as 0.6% to near $4,810 an ounce, reversing an earlier gain. That followed an advance of more than 2% in the previous session as Washington and Tehran looked to arrange a second round of peace talks in the coming days, according to people familiar with the matter. US President Donald Trump said negotiations could resume “over the next two days,” the New York Post reported.

Oil fluctuated though remained below $100 a barrel on Wednesday, while a gauge of the dollar was little changed after shedding 0.3% a day earlier. A recent retreat in energy prices has relieved some of the inflationary pressure that has weighed on bullion since the war began more than six weeks ago.

Concern about rising consumer prices had led traders to bet that central banks will hold interest rates steady for longer or even hike them — a headwind for non-yielding bullion. Gold has fallen about 9% since the start of the conflict, with a liquidity squeeze in the early weeks of fighting leading investors to offload holdings and cover losses elsewhere.

“The market is essentially caught between easing conflict expectations and still-unresolved inflation pressures,” said Dilin Wu, a research strategist at Pepperstone Group Ltd. The Federal Reserve’s “higher-for-longer” stance on rates is unchanged, she said, adding: “With no yield, gold faces a natural ceiling.”

Meanwhile, the situation in the Middle East remains fragile as a standoff persists around Hormuz, the maritime chokepoint that links the Persian Gulf to global markets. The US is pressing ahead with a naval blockade to curb Iran’s oil exports, while Tehran is considering a short-term pause to shipments.

Even if the war were to end, disruption to energy supplies is likely to persist, with key energy infrastructure in the Gulf region having suffered damage from missile and drone strikes.

Spot gold fell 0.5% to $4,816.41 an ounce at 2:45 p.m. Singapore time. Silver slipped 0.2% to $79.40 an ounce, having added more than 5% on Tuesday. Platinum and palladium were little changed, and the Bloomberg Dollar Spot Index was flat.

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