Gold prices were largely steady on Friday as investors balanced renewed tensions in the Strait of Hormuz with hopes for a diplomatic solution, while assessing how geopolitical risks and higher energy costs could influence the Federal Reserve’s interest rate outlook. Spot gold (XAU/USD) edged 0.03% higher to $4,242.07 an ounce, while gold futures were nearly unchanged at $4,300.26. Investors remain concerned that prolonged disruptions in the Middle East could push energy prices higher, increase inflationary pressures and encourage the Federal Reserve to maintain tighter monetary policy. Markets are pricing in roughly a 60% probability of a September rate hike following reports that Fed Chair Kevin Warsh could support higher borrowing costs if inflation remains elevated. The U.S. Dollar Index remained near 100, providing limited direction for gold prices.