PRECIOUS-Gold falls as Middle East tensions keep oil soaring, Fed meeting in focus

By Ishaan Arora

April 28 (Reuters) - Gold fell more than 2% to a near four-week low on Tuesday, on peristent inflation concerns after U.S. President Donald Trump appeared dissatisfied with Iran's latest proposal to end the war, while investors awaited the Federal Reserve's monetary policy meeting this week.

Spot gold XAU= dropped 2.4% to $4,570.34 per ounce, as of 11:24 a.m. EDT (1524 GMT), its lowest level since April 2. U.S. gold futures GCcv1 for June delivery fell 2.3% to $4,584.70.

"It's revived pessimism about the peace process in the Middle East. The Trump administration rejected Iran's most recent offer and so the strait remains closed," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

"That has driven oil prices up and revived concerns about inflation heading into the FOMC meeting this week... pushing gold to four-week lows."

Trump is unhappy with the latest Iranian proposal on resolving the war, a U.S. official said, dampening hopes for a resolution to the conflict that has disrupted energy supplies, fuelled inflation and killed thousands.

Oil prices rose more than 3% as stalled efforts to end the Iran war kept the Strait of Hormuz largely closed, constraining Middle East supplies, while the UAE announced that it would leave OPEC and OPEC+. O/R

Elevated crude prices add to inflationary pressures, increasing the likelihood of higher interest rates. While gold is traditionally seen as a hedge against inflation, high interest rates weigh on its appeal as a non-yielding asset.

Investors expect the Fed to hold interest rates steady at its two-day meeting ending Wednesday. They will also be eyeing Fed Chair Jerome Powell's remarks closely.

Other central bank decisions this week will also be on investors' radar, including those from the European Central Bank, the Bank of England and the Bank of Canada.

Meanwhile, China, the world's top gold consumer, net imported 47.866 metric tons in March from Hong Kong, up from 46.249 tons in February, Hong Kong Census and Statistics Department data showed on Tuesday.

Spot silver XAG= fell 3.6% to $72.78 per ounce, platinum XPT= lost 1.9% to $1,945.28 and palladium XPD= was down 1.2% at $1,459.78.