PRECIOUS-Gold rises as investors weigh US-Iran tensions; focus on inflation data

(Updates for US mid-session trading)

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US weekly jobless claims fall more than expected

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Key US inflation data due on Friday

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Fed minutes show officials grappling with policy split

By Anmol Choubey

Feb 19 (Reuters) - Gold prices rose on Thursday as investors ?assessed U.S.-Iran tensions, while a drop in U.S. jobless ?claims signalled labour-market stability ahead of inflation data later this week. Spot gold was up 0.6% at $5,007.46 per ounce ?by 11:14 a.m. EST (1614 GMT). U.S. gold futures for April delivery edged up 0.3% ?to $5,025.80.

"We're being whipsawed and moving sideways with volatility," said Daniel ?Pavilonis, senior market ?strategist at RJO Futures.

"Tensions with Iran are supporting gold, and while the broader outlook remains quite bullish, we ?could still see one more leg down driven ?by factors outside the Iran situation." Top U.S. national security advisers met at the White House on Wednesday to discuss Iran and were ?told all U.S. forces deployed to the ?region should ?be in place by mid-March. The White House said some progress was made in this week's talks with Iran in Geneva, though significant gaps ?remained.

Geopolitical and economic flashpoints tend to work in gold's favour, as the yellow ?metal is traditionally viewed as a safe store of value. The minutes from the Federal Reserve's January 27-28 meeting, released on Wednesday, showed policymakers were split on the monetary policy path ahead, with several open to hikes if inflation stays high, while ?others favoured ?cuts if price pressures ease. U.S. weekly jobless claims fell to ?206,000 in the week to February 14, well below expectations for a reading of ?225,000, reinforcing the strength signaled by last week's robust monthly employment report. Investors are now awaiting the release on Friday of the U.S. Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge for further clues on the U.S. central bank's policy trajectory. Markets currently expect this year's first U.S. interest rate cut to occur in June, according to CME Group's FedWatch Tool . Non-yielding ?gold tends to do well in an environment of low interest rates. Spot silver rose 1.4% to $78.25 per ounce after climbing more than 5% on Wednesday. Spot platinum gained ?0.3% to $2,076.65 per ounce, while palladium lost ?2% to $1,681.94. (Reporting by Anmol Choubey in Bengaluru; Editing by ?Jan Harvey and Paul Simao)