PRECIOUS-Gold firms on safe-haven demand, all eyes on Iran's next move

By Anushree Mukherjee

June 23 (Reuters) - Gold edged higher on Monday as Iran-Israel tensions lifted safe-haven demand, though gains were limited by a stronger dollar, while markets closely watched for any Iranian response to U.S. strikes on its nuclear sites.

Spot gold XAU= was up 0.1% at $3,369.80 an ounce, as of 1211 GMT. U.S. gold futures GCcv1 were steady at $3,385.90.

"Continued and multiple geopolitical uncertainties will likely continue to underpin (gold prices)," said Ole Hansen, head of commodity strategy at Saxo Bank

"The prospect of a Fed rate cut delay amid higher energy prices potentially strengthening the dollar calls for patience with a fresh record high not on the immediate horizon." O/R

The dollar firmed 0.6% against its peers, limiting gains for gold as it makes the metal more expensive for holders of other currencies. USD/

Iran and Israel traded air and missile strikes as the world braced for Tehran's response to the U.S. attack on its nuclear sites and U.S. President Donald Trump raised the idea of regime change in the Islamic Republic.

Iran vowed to defend itself a day after the U.S. dropped 30,000-pound bunker-buster bombs onto the mountain above Iran's Fordow nuclear site.

The U.S. bombing of Iran's nuclear sites injected fresh uncertainty into the outlook for inflation and economic activity at the start of a week chock-full of new economic data and central banker commentary, including two days of Congressional testimony from Federal Reserve Chair Jerome Powell.

Last week, the U.S. central bank held interest rates steady, but slowed its overall outlook for rate cuts in response to a more challenging economic outlook.

Investors are currently anticipating 50 basis points worth of Fed rate cuts by the end of this year. USDIRPR

Bullion tends to perform well in low-interest-rate environments and during periods of uncertainty.

Elsewhere, spot silver XAG= rose 0.3% to $36.12, platinum XPT= rose 2.1% at $1,292.03, while palladium XPD= gained 2.7% to $1,072.42.