May 20 (Reuters) - Gold prices rose 1% on Wednesday, as hopes for a resolution to the Iran conflict pressured oil markets, relieving some inflation fears and knocking U.S. Treasury yields from their recent highs.

Spot gold gained 1.1% to $4,531.99 per ounce by 14:10 p.m. ET (1810 GMT). Prices hit their lowest in more than seven weeks earlier in the session.

U.S. gold futures for June delivery settled 0.1% higher at $4,535.30.

"We've seen a reprieve from the continued increase in yields. So as a result, we've seen gold prices bounce off the recent lows," said David Meger, director of metals trading at High Ridge Futures.

The yield on the benchmark 10-year U.S. Treasury note ticked lower, after touching its highest level since January 2025 on Tuesday.

Higher Treasury yields increase the opportunity cost of holding non-yielding bullion.

"Any type of resolution to the war or opening of the Strait of Hormuz would be a positive for the gold market in so much as the expectation would be that interest rates would decline, and hence that would be opportunistic or helpful to the gold market," Meger added.

Brent crude futures slipped after U.S. President Donald Trump again said the war with Iran would end "very quickly." Still, investors remained cautious over the outcome of peace talks as the disruption to Middle Eastern supply continued. [O/R]

The minutes of the Federal Reserve's April meeting showed officials warned the Iran war could fuel inflation, boosting support for a possible rate hike, with most policymakers saying tightening may be needed if inflation remains above the 2% target.

Despite being an inflation hedge, non-yielding gold underperforms in high interest rate environments.

Investors are now pricing in a 48.6% chance the Federal Reserve could raise rates in December, and an 89.6% chance it maintains current rates at its next meeting in June, according to CME's FedWatch tool.

Meanwhile, Citi said it was staying cautious near-term on gold with a zero to three-month point-price target of $4,300/oz.

Spot silver rose 3.1% to $76.06 per ounce, platinum gained 1%.6 to $1,952.30, and palladium was up 1.5% at $1,373.62.

(Reporting by Anjana Anil in Bengaluru, additional reporting by Anmol Choubey; Editing by Kirsten Donovan and Shailesh Kuber)

By Anjana Anil