Gold dips as Mideast tensions fuel inflation worries, cloud rate outlook

Among other metals, spot silver XAG= dipped 0.5% to $58.314 per ounce and platinum XPT= gained 0.2% to $1,634.36.

Palladium XPD= rose 0.8% to $1,315.05, after gaining 5% in the previous session.

Gold prices slipped on Wednesday as escalating tensions in the Middle East continued to stoke inflation concerns, reinforcing expectations of higher U.S. interest rates.

Spot gold XAU= fell 0.7% to $4,027.49 per ounce by 0843 GMT. Prices rose over 2% to a session high of $4,100.19 per ounce on Tuesday after soft U.S. inflation data.

U.S. gold futures GCcv1 for August delivery slid 0.9% to $4,034.00.

Iran's Islamic Revolutionary Guard Corps threatened to close all possible export corridors benefiting Washington, after Tehran shut the Strait of Hormuz and the U.S reimposed a naval blockade of Iranian ports. Oil edged higher after closing at a one-month high on Tuesday. O/R

"Higher U.S. crude, gasoline and diesel prices will result in high inflation numbers in the next print in August, that could keep the tone of some Fed officials on the hawkish side, which is not helping gold," said UBS analyst Giovanni Staunovo.

"In the near-term oil and U.S. gasoline prices will continue to influence gold, as it remains a key driver of U.S. inflation," Staunovo added.

Higher interest rates tend to weigh on gold, as they increase the opportunity cost of holding the non-yielding asset.

Fed Chair Kevin Warsh told lawmakers on Tuesday the central bank had "no tolerance for persistently elevated inflation," hinting that the CPI data was not all swell.