July 1 (Reuters) - Gold prices extended losses on Wednesday after falling to a seven-month low in the previous session, as fading prospects of a permanent U.S.-Iran peace deal heightened inflation concerns and bolstered expectations of Federal Reserve rate hikes.

FUNDAMENTALS

* Spot gold XAU= was down 0.6% at $3,981.69 per ounce, as of 0112 GMT, after hitting its lowest level since last November in the previous session. U.S. gold futures GCcv1 for August delivery lost 1.1% to $3,994.40.

* Dimming prospects for a near-term diplomatic breakthrough, Iran said it would not meet with senior U.S. envoys who travelled to the region following an outbreak of hostilities.

* Iranian officials added that both sides must still resolve ceasefire terms signed two weeks ago before addressing more complex issues on potential limits to its nuclear programme.

* Federal Reserve Bank of Cleveland President Beth Hammack said on Tuesday it remains possible that she'll advocate for higher interest rates if inflation pressures fail to ease, underscoring a still-hawkish policy outlook.

* Traders are pricing in roughly a 67% chance of a rate hike in September, according to the CME FedWatch Tool, reflecting firming expectations of tighter monetary policy. FEDWATCH/

* Investors now await the June ADP employment data, due later in the day, and nonfarm payroll figures on Thursday for further clues on Fed's rate path, which could shape near-term moves in bullion.

* Meanwhile, an OMFIF survey showed more central banks plan to cut dollar allocations over the coming decade as political risks associated with the U.S. currency rise.

* Spot silver XAG= fell 0.9% to $58.04 per ounce, platinum XPT= lost 0.9% to $1,537.78, and palladium XPD= inched 0.2% lower to $1,202.33.