Updates prices for U.S. mid-session trade

By Ishaan Arora

May 14 (Reuters) - Gold prices held largely steady on Thursday, as investors focused on the latest developments in the Middle East and the U.S. President's meeting with Chinese President Xi Jinping.

Spot gold XAU= was down 0.1% at $4,680.26 per ounce at 1:01 p.m. EDT (1701 GMT). U.S. gold futures GCcv1 for June delivery fell 0.4% to $4,686.20.

The U.S. dollar .DXY was up 0.3%, making greenback-priced bullion more expensive for holders of other currencies. USD/

Oil prices slipped after Iran's state media said about 30 vessels had crossed the Strait of Hormuz even as there were reports of attacks in the area. O/R

"There is risk of a significant downturn (in gold) if this Middle East conflict isn't resolved," said Bart Melek, global head of commodity strategy at TD Securities. Inventories and supply of energy products could be reduced to the point where prices rise sharply, leading to a rise in overall inflation, he added.

Prospects of U.S. rate cuts have largely faded, according to CME Group's FedWatch tool, amid a sharp energy-driven rise in April U.S. producer and consumer prices. FEDWATCH

While gold is considered a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.

"Gold lacks firm direction as markets weigh lingering geopolitical uncertainty, the economic fallout from the Middle East conflict and hopes that the Trump-Xi meeting could help broker a resolution," Nikos Tzabouras, senior market analyst at Tradu.com, said in a note.

Meanwhile, Xi told Trump that trade talks were making progress on Thursday, but said disagreement over Taiwan could upend relations. The U.S. summary of the talks, however, made no mention of Taiwan.

Elsewhere, the Indian government announced an import cap on gold at 100 kilograms, under its advance authorization scheme, which gives Indian exporters certain exemptions.

Spot silver XAG= fell 3.6% to $84.84 per ounce, platinum XPT= lost 3.1% to $2,071.53, and palladium XPD= was down 3.5% at $1,447.52.