Gold subdued on inflation worries, rate hike expectations

Sept. 9 (Reuters) - Gold prices eased on Wednesday as concerns that escalating Middle East tensions could drive inflation higher reinforced bets on elevated interest rates, with key U.S. inflation data due later this week.

• Spot gold XAU= was down 0.1% at $4,349.44 per ounce, as of 0040 GMT. U.S. gold futures GCcv1 for December delivery were down 1% at $4,393.30.

• Markets are awaiting U.S. producer price index data due on Thursday, with consumer price index data set to follow on Friday.

• The Middle East war intensified with Iranian-backed Houthis in Yemen launching strikes on several Saudi cities, further embroiling a U.S. ally in the conflict, while U.S. forces hit multiple Iranian oil tankers and Iran targeted a U.S. base in Jordan.

• Brent crude prices jumped for a fourth straight session. Rising crude prices tend to put upward pressure on inflation, as higher energy costs filter through the broader economy. O/R

• According to the CME FedWatch Tool, a majority of traders expect the Federal Reserve to raise interest rates at its upcoming policy meeting.

• Although gold is widely regarded as an inflation hedge, elevated rates weigh on the appeal of non-interest-bearing bullion.