Gold falls on growing Fed rate hike bets ahead of policy meeting

The Bank of Japan is also expected to raise rates on Friday, amid rising energy prices and little sign of easing Middle East tensions.

Although gold is typically seen as an inflation hedge, higher interest rates tend to reduce the appeal of non-yielding bullion.

Oil prices rose about 3% on Monday, after new strikes on Saudi Arabian energy and civilian infrastructure and Iranian attacks on ships in the Gulf compounded supply concerns following the closure of a key Saudi oil pipeline. O/R

Middle East diplomacy appeared to falter heading into Monday with the postponement of a meeting between Iran and other Gulf powers.

Among other metals, spot silver XAG= slid 2.2% to $63.11 per ounce, platinum XPT= dipped 1.3% to $1,772.47, and palladium XPD= fell 0.8% to $1,288.67.

Sept. 14 (Reuters) - Gold prices slipped on Monday, as expectations of a U.S. Federal Reserve interest rate hike this week strengthened after recent hot inflation data and rallying oil prices.

Spot gold XAU= was down 1.2% at $4,296.68 per ounce by 1216 GMT, after posting a third straight weekly decline on Friday. U.S. gold futures GCcv1 dropped 1.7% to $4,335.40.

The dollar firmed at an over one-week high, making greenback-priced bullion more expensive for holders of other currencies. USD/

"Markets are now fully pricing in a Fed rate hike following last week's CPI data. At the same time, the renewed rise in oil prices could reinforce inflation concerns and keep the Fed on a hawkish footing," said UBS analyst Giovanni Staunovo.