Gold slipped on Tuesday as US strikes in Iran pushed Brent prices higher, stoking inflation worries and clouding the outlook for US interest rates. Spot gold was down 0.7% at $4,537.10 per ounce, as of 1052 GMT. US gold futures for June delivery was unchanged at $4,536.80. "The uncertainty triggered an uptick in oil prices, sharpening inflationary fears and reinforcing hawkish Federal Reserve expectations, creating a headwind for non-yielding gold," ActivTrades analyst Ricardo Evangelista said. "The path of least resistance for gold prices remains to the downside... Traders will remain focused on the US-Iran talks, while also looking ahead to the release of US PCE inflation data." Brent crude oil prices rose sharply after the US military carried out strikes in Iran, dampening hopes of a swift resolution to the Middle East conflict. US Secretary of State Marco Rubio said on Tuesday that negotiating a deal with Iran could "take a few days." Elevated crude oil prices can accelerate inflation and keep interest rates higher for longer. While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal. Markets are pricing in a Fed rate hike before year-end, with a 41% chance of a 25-basis-point hike in December, according to CME Group's FedWatch tool, according to Reuters. Investors now await the US Personal Consumption Expenditures (PCE) data for April due on Thursday, for more cues on US monetary policy. Meanwhile, UBS lowered its year-end gold price target by $400 to $5,500 due to persistent risks from higher yields and a stronger dollar. However, "elevated global debt burdens, persistent fiscal deficits in the US, and continued reserve diversification trends should again elevate the strategic case for hard assets, especially as oil prices likely moderate toward the end of the year," UBS said in a note. Spot silver fell 2.2% to $76.37 per ounce, platinum lost 0.9% to $1,949.54, and palladium slid 1.7% to $1,374.
