Gold slips as oil rally keeps inflation, rate outlook on investors' radar

Elsewhere, spot silver XAG= lost 0.3% to $58.48 per ounce. Platinum XPT= gained 0.2% to $1,635.56 and palladium XPD= edged 0.2% higher to $1,307.11.

Gold prices fell on Wednesday after climbing more than 2% in the previous session, as rising oil prices fuelled inflation concerns and uncertainty over the U.S. interest-rate outlook, weighing on non-yielding bullion.

Spot gold XAU= was down 0.5% at $4,035.67 per ounce, as of 0300 GMT. U.S. gold futures GCcv1 for August delivery eased 0.7% to $4,042.20.

Gold jumped more than 2% to as much as $4,100.49 per ounce on Tuesday, rebounding from a two-week low, after data showed U.S. consumer inflation slowed more than expected in June as energy prices retreated.

Oil prices extended gains to a third consecutive session as U.S. President Donald Trump reimposed a naval blockade of all Iranian ports and threatened to hit power plants and bridges next week unless Tehran resumes negotiations, in the latest U.S. escalation of the conflict.

"I reckon that the market is now looking past the CPI data, which is kind of a lagging indication... Trump continues to maintain the blockade of ships that is flowing out of the Strait of Hormuz, causing oil prices to rise and gold to come under pressure," said Kelvin Wong, a senior market analyst at OANDA.

Elevated crude oil prices can stoke concerns around inflation and higher-for-longer interest rates, and while gold is traditionally seen as an inflation hedge, it does lose its appeal as a non-yielding asset in a high-interest-rate environment.