To update prices

By Pablo Sinha

May 11 (Reuters) - Gold prices fell on Monday after oil prices rose due to a lack of progress in peace talks between the United States and Iran, which fueled concerns that rising inflation will keep interest rates high for longer.

By 0607 GMT, spot gold had fallen 1.2 percent to $ 4,657.89 an ounce.

U.S. gold futures for June delivery fell 1.4 percent to $ 4,665.70 .

The dollar rose, increasing the cost of dollar-denominated gold for holders of other currencies.

US President Donald Trump on Sunday rejected Iran's response to a US proposal for peace talks, dashing hopes for an imminent end to the 10-week-old war that has caused widespread damage in Iran and Lebanon, paralyzed shipping in the Strait of Hormuz, and raised global energy prices.

Tim Waterer, senior market analyst at KCM Trade, said , "We are essentially seeing a decline in hopes for an imminent peace agreement, and gold is under pressure from the continued rise in crude prices."

Oil prices jumped as the Strait of Hormuz remained largely closed, keeping global energy supplies limited.

Rising crude oil prices are a sign of rising inflation, which increases the likelihood of interest rate hikes. Gold is seen as a hedge against inflation, but higher interest rates typically negatively impact non-yielding assets like gold.

He pointed to a semi-annual report issued by the Federal Reserve (the US central bank) on Friday, which stated that the ongoing war with Iran and its impact on oil prices and supplies topped the list of concerns related to financial stability.

Goldman Sachs has pushed back its forecast for Federal Reserve interest rate cuts to December 2026 and March 2027, after previously expecting cuts in September and December of this year, noting that rising energy prices will likely keep inflation high.

Investors are now awaiting the U.S. Consumer Price Index data for April, due later this week, for further clues about the direction of the U.S. central bank's monetary policy.

As for other precious metals, silver fell 0.2 percent to $ 80.13 an ounce in spot trading. Platinum dropped 1.2 percent to $ 2,029.95 , and palladium declined 0.7 percent to $ 1,481.09 .