PRECIOUS-Gold climbs as dollar weakens, drop in oil prices tempers inflation fears

April 14 (Reuters) - Gold prices rose on Tuesday, supported by a weaker dollar, while a drop in oil prices eased concerns over inflation and the prospect of U.S. interest rates staying higher for longer.

FUNDAMENTALS

Spot gold XAU= was up 0.6% at $4,769.52 per ounce as of 0059 GMT. U.S. gold futures GCcv1 for June delivery rose 0.6% to $4,793.40.

The U.S. dollar hovered near its lowest level in over a month, making dollar-denominated commodities, such as bullion, more affordable for holders of other currencies. USD/

Crude oil prices fell below $100 a barrel, easing concerns of inflation. Higher crude prices feed into inflation by raising transportation and production costs. O/R

The U.S. military began a blockade of Iran's ports on Monday, President Donald Trump said, and Tehran threatened to retaliate against its Gulf neighbors' ports after weekend talks in Islamabad on ending the war broke down.

However, reports that Washington and Tehran were still open to talks after a tense meeting in Islamabad helped ease concerns over the escalating conflict in the Middle East.

While inflation typically boosts gold's appeal as a hedge, elevated interest rates weigh on the non-yielding metal's demand.

SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings remained steady at 959.24 tonnes on Friday. GOL/ETF

"Central bank demand (for gold), though uneven on a month to-month basis, continues to reflect broader diversification efforts, and gold's role as a hedge against geopolitical risk and policy uncertainty remains relevant within diversified portfolios," said OCBC in a note.

Among other metals, spot silver XAG= rose 0.5% to $75.94 per ounce, platinum XPT= gained 0.8% to $2,087.80, and palladium XPD= was up 0.5% to $1,581.48.