Gold prices rebounded on Thursday from a one-month low hit the day before, though gains were capped as ​elevated oil prices kept fears alive of inflation and higher-for-longer interest rates.

Spot gold was up 0.7% at $4,573.09 ​per ounce, ​as of 0229 GMT, after falling to its lowest level since March 31 in the previous session. U.S. gold futures for June delivery rose 0.5% to $4,585.10.

"Gold is ⁠representing a value proposition for traders at current levels. So, dip buying is playing a part in gold's recovery efforts today," said Tim Waterer, chief market analyst at KCM Trade.

Although gold is trying to stage a modest recovery from oversold levels, strong oil prices ​and fresh inflation ‌risks they carry are ⁠keeping a lid ⁠on its near-term upside, Waterer said.

Brent crude hovered above $120 a barrel, as deadlocked U.S.-Iran negotiations made investors ​more concerned about prolonged disruptions to Middle Eastern supply.

Elevated oil ‌prices add to inflation risks, increasing the likelihood of higher ⁠interest rates. While gold is traditionally seen as a hedge against inflation, high interest rates weigh on its appeal as a non-yielding asset.

The Federal Reserve held interest rates steady on Wednesday, 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.

Traders are now pricing out Fed rate cuts entirely for this year, with markets now seeing ‌a 30% chance of a hike by March 2027, sharply up ⁠from roughly 5% a day prior.

Meanwhile, U.S. President Donald ​Trump discussed how to mitigate the impact of a possible months-long U.S. blockade of Iran's ports with oil companies, a White House official said on Wednesday, as the U.S. president urged ​Tehran to "get smart soon" ‌and sign a deal.

Spot silver rose 1.6% to $72.63 per ⁠ounce, platinum gained 1.8% to $1,913.86, and palladium ​was up 0.4% at $1,465.14. (Reporting by Noel John in Bengaluru; Editing by Subhranshu Sahu)