July 16 (Reuters) - Gold prices fell on Thursday as there were no signs of the escalating conflict in the Middle East abating, dashing recent optimism about easing inflation and raising concerns that rising oil prices could push up interest rates.

Spot gold fell 0.6 percent to $4,034.42 an ounce by 0349 GMT. U.S. gold futures for August delivery declined 0.3 percent to $4,039.90.

"Gold prices are falling as escalating attacks in the Middle East continue to push oil prices sharply higher this week, keeping inflation concerns alive," said Jigar Trivedi, research analyst at Indus Industrial Estates.

Oil prices continued to make gains for the fourth consecutive session, as the United States launched two waves of attacks on Iranian coastal defenses and missile sites after reimposing a naval blockade on the Islamic Republic's ports.

Iran responded by targeting US military sites in neighboring countries in what it described as a "war of survival" with the United States.

Trivedi said, "The inflation figures for June did not reflect the impact of the latest escalation in the conflict between the United States and Iran, as the interim peace agreement reached last month effectively collapsed."

US consumer and producer price inflation slowed in June, amid a decline in energy product costs, reinforcing signs that inflation was easing before the latest escalation in the conflict.

However, this slowdown was not enough to convince financial markets to rule out a Federal Reserve (US central bank) interest rate hike this year.

Data from the CME Group's FedWatch tool showed that traders still expect a 73 percent probability that the Federal Reserve will raise interest rates in December.

Federal Reserve Chairman Kevin Warsh confirmed his intention to reduce inflation without indicating how this would be achieved.

As for other precious metals, silver fell 1.1 percent to $57.14 an ounce in spot trading, platinum declined 0.6 percent to $1,664, while palladium dropped 0.3 percent to $1,309.86.