PRECIOUS-Gold falls, hovers near 1-1/2-month low on increased rate hike bets

* Trump says "good chance" of nuclear deal with Iran

* Traders see 38% chance of a US interest rate hike this year

* Minutes of Fed's April policy meeting due on Wednesday (Updates for EMEA morning hours)

By Noel John

May 19 (Reuters) - Gold prices fell on Tuesday, hovering near a one-and-a-half-month low hit in the previous session, pressured by inflation fears and expectations of higher U.S. interest rates.

Spot gold was down 0.5% at $4,542.07 per ounce by 0922 GMT. Prices fell to their lowest level since March 30 at $4,479.54 on Monday.

U.S. gold futures for June delivery lost 0.3% to $4,545.50.

"Hawkish Federal Reserve expectations, driven by inflationary fears stemming from a protracted standoff in the Persian Gulf, are weighing on the precious metal," said ActivTrades analyst Ricardo Evangelista.

"Investors will continue to keep a close eye on developments surrounding the standoff between the U.S. and Iran, with any new developments likely to influence expectations regarding the Fed's monetary policy path and, in turn, impact gold prices."

Benchmark 10-year U.S. Treasury yields steadied around a more than one-year high, as rising energy prices from the Middle East war stoked inflation fears and boosted wagers on rate hikes.

Higher Treasury yields raise the opportunity cost of holding non-yielding assets including gold.

Brent crude oil prices fell on Tuesday but held above $110 a barrel, as the conflict has effectively closed the key Strait of Hormuz.

Traders are increasingly pricing the possibility of the Fed tightening monetary policy this year, with a 38% chance of a rate hike expected in December, according to CME Group's FedWatch tool.

While gold is seen as an inflation hedge, high interest rates tend to weigh on the non-yielding asset.

Investors also await the minutes of the Fed's latest policy meeting, due on Wednesday, for fresh clues on the monetary policy path.

On the geopolitical front, U.S. President Donald Trump said on Monday he had paused a planned attack against Iran after Tehran sent a peace proposal to Washington, and that there was now a "very good chance" of reaching a deal limiting Iran's nuclear program.

Spot silver fell 2.4% to $75.84 per ounce, platinum lost 0.8% to $1,963.42, and palladium dropped 1.4% to $1,398.14. (Reporting by Noel John in Bengaluru; Editing by Sonia Cheema)