PRECIOUS-Gold gains on weaker dollar, easing inflation concerns

By Noel John

March 10 (Reuters) - Gold prices rose on Tuesday, supported by a weaker U.S. dollar and easing energy costs after U.S. President Donald Trump suggested that the war in the Middle East could end soon.

Respite from a potential war-driven surge in inflation would likely reduce the chances of central banks raising interest rates, a positive for non-yielding gold.

Spot gold XAU= rose 0.7% to $5,174.49 per ounce, as of 0631 GMT. U.S. gold futures GCcv1 for April delivery rose 1.6% to $5,184.

The dollar fell 0.4%, making greenback-priced bullion cheaper for holders of other currencies. USD/

Gold prices rose "due to the news flow from U.S. President Trump himself, stating that there is a potential for de-escalation ... So what we could see is that potential inflation expectation starts to tone down given this dramatic fall in oil price," said Kelvin Wong, a senior market analyst at OANDA.

Oil prices fell by more than 5% following Trump's comments. O/R

But, the U.S. president also warned that U.S. attacks could rise sharply if Iran sought to block tanker traffic through the Strait of Hormuz, which handles one-fifth of the world's oil supply.

The war has effectively shut the strait, stranding tankers for over a week and forcing producers to halt output as storage fills up, sending energy prices soaring.

Gold prices fell by as much as 2% on Monday as higher energy costs fanned inflation concerns and further dimmed the prospects for a near-term cut in interest rates by the U.S. Federal Reserve.

Markets are now awaiting the U.S. consumer price index for February, due on Wednesday, and Personal Consumption Expenditures (PCE) index - the Fed's preferred inflation gauge - on Friday.

Spot silver XAG= rose 2% to $88.73 per ounce. Spot platinum XPT= gained 0.7% at $2,196.35, while palladium XPD= lost 0.3% to $1,685.01.