PRECIOUS-Gold falls as renewed US-Iran tensions dampen peace hopes, clouds interest rate outlook

* Brent crude oil rises after US military strikes Iran

* Rubio says Iran deal could take days

* UBS lowers year-end gold price target by $400 to $5,500

(Updates with European trading)

By Noel John

May 26 (Reuters) - Gold fell on Tuesday, weighed down by fears of elevated inflation after renewed U.S.-Iran tensions pushed up Brent prices and clouded the U.S. interest rate outlook.

Spot gold was down 1.1% at $4,521.80 per ounce, as of 0737 GMT. U.S. gold futures for June delivery was unchanged at $4,522.50.

"The uncertainty triggered an uptick in oil prices, sharpening inflationary fears and reinforcing hawkish Federal Reserve expectations, creating a headwind for non-yielding gold," ActivTrades analyst Ricardo Evangelista said.

"The path of least resistance for gold prices remains to the downside... Traders will remain focused on the U.S.-Iran talks, while also looking ahead to the release of U.S. PCE inflation data."

Brent crude oil prices rose sharply after the U.S. military carried ?out strikes in Iran, dampening hopes of a swift resolution to the Middle East conflict.

U.S. Secretary of State Marco Rubio said on Tuesday that negotiating a deal with Iran could "take a few days."

Elevated crude oil prices can accelerate inflation and keep interest rates higher for longer. While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal.

Markets are pricing in a Fed rate hike before year-end, with a 41% chance of a 25-basis-point hike in December, according to CME Group's FedWatch tool.

Investors now await the U.S. Personal Consumption Expenditures (PCE) data for April due on Thursday, for more cues on U.S. monetary policy.

Meanwhile, UBS lowered its year-end gold price target by $400 to $5,500 due to persistent risk from higher yields and dollar.

However, "elevated global debt burdens, persistent fiscal deficits in the U.S., and continued reserve diversification trends should again elevate the strategic case for hard assets, especially as oil prices likely moderate toward the end of the year," UBS said in a note.

Spot silver fell 2.6% to $76.03 per ounce, platinum lost 1.1% to $1,945.85, and palladium slid 1.7% to $1,374.06. (Reporting by Noel John in Bengaluru; Editing by Vijay Kishore)