PRECIOUS-Gold eases as inflation jitters, Iran war cloud US rate outlook

* U.S. to help free ships stranded in Strait of Hormuz

* Tehran reviewing U.S. response to Iran's 14-point proposal

* Markets in China, Japan and UK closed for holidays (Updates prices as of 0456 GMT)

By Pablo Sinha

May 4 (Reuters) - Gold prices nudged lower in thin trade on Monday, weighed down by inflation worries that clouded the U.S. monetary policy outlook, while markets awaited developments in U.S.-Iran peace negotiations.

Spot gold was down 0.2% at $4,605.19 per ounce, as of 0456 GMT. U.S. gold futures for June delivery fell 0.6% to $4,616.30.

Markets in China, Japan and the UK are closed for holidays.

Federal Reserve Chair Jerome Powell closed out eight years as head of the U.S. central bank on Wednesday with interest rates on hold and rising concern about inflation.

"Gold is still feeling the lingering effects of last week's hawkish Fed messaging, particularly the notable dissenting voices pushing back against further easing," said Tim Waterer, chief market analyst at KCM Trade.

Federal Reserve officials, who dissented against the policy statement last week, said the oil price shock from Iran war means the U.S. central bank should be clear it can no longer lean towards interest rate cuts, with a rise in borrowing costs possible in the future.

Increasing oil prices could encourage central banks to hold interest rates higher for longer, which would pressure non-yielding assets such as gold as investors turn to alternate options like Treasury yields that offer better returns.

Oil prices eased but held above $100 a barrel, with the lack of clarity around a potential U.S.-Iran peace deal remaining in focus.

A tanker reported being hit by unknown projectiles in the Strait of Hormuz, a maritime security organisation said on Monday, shortly after U.S. President Donald Trump said Washington would start helping free ships stranded in the Gulf by the U.S.-Israeli war on Iran.

Iranian state media reported that Washington conveyed its response to Iran's 14-point proposal via Pakistan, and that Tehran was now reviewing it.

"We see gold largely trading in a $4,400-$5,500 range by year-end. The upper end of that range would require a durable reduction in Middle East tensions and some easing of inflation pressures, while persistent high oil prices would keep the metal toward the lower half of the range," Waterer added.

Spot silver rose 0.1% to $75.37 per ounce, platinum gained 0.7% to $2,002.80, and palladium was up 0.2% at $1,528.22.

(Reporting by Pablo Sinha in Bengaluru; Editing by Sherry Jacob-Phillips and Janane Venkatraman)