Updates prices as of 0750 GMT

By Pablo Sinha

May 12 (Reuters) - Gold prices dropped from a three-week high on Tuesday, as hopes for a peace deal between the United States and Iran dimmed, lifting the dollar and heightening concerns around inflation ahead of key U.S. inflation data.

Spot gold XAU= fell 0.8% at $4,697.97 per ounce by 0750 GMT, after climbing to its highest since April 21 in early Asia trade.

U.S. gold futures GCcv1 for June delivery lost 0.5% to $4,704.70.

U.S. President Donald Trump said a ceasefire with Iran was "on life support" as Tehran rejected a U.S. proposal to end the conflict and stuck to a list of demands that Trump described as "garbage".

"We're really looking to what the CPI (Consumer Price Index) numbers might give, and if there is a stronger inflationary impetus there than already expected," said Ilya Spivak, head of global macro at Tastylive.

The data is expected later in the day and could give investors clues into the Federal Reserve's future monetary policy path.

"We've already seen expectations for a lot of central banks shift in a much more hawkish direction, and for the Fed, it's meant a dropping of all rate cut possibilities for this year."

BofA Global Research and Goldman Sachs scaled back expectations of U.S. interest rate cuts this year, citing elevated inflation due to high energy prices and growing strength in the labour market.

Meanwhile, oil prices rose, and the dollar extended gains from the previous session. O/R USD/

Elevated crude oil prices can stoke inflation, increasing the likelihood of higher interest rates. While gold is seen as a hedge against inflation, high rates tend to weigh on the non-yielding asset.

Markets are also watching Trump's two-day visit to China this week, during which he is set to meet Chinese President Xi Jinping to discuss a wide variety of topics, including the Middle East.

Spot silver XAG= fell 2.2% at $84.18 per ounce, platinum XPT= slid 3.1% to $2,064.83, and palladium XPD= was down 1.7% at $1,483.