PRECIOUS-Gold falls to two-month low as war-driven inflation fuels rate-hike bets

(Recasts for US market open)

* Fed's Kashkari calls for focus on inflation risk

* Investors focusing on key US data due later this week

* Spot silver down more than 3%

By Anjana Anil and Anmol Choubey

May 27 (Reuters) - Gold prices fell to nearly a two-month low on Wednesday, pressured by expectations of tighter monetary policy to fend off rising inflation, with no clear end in sight to the war in Iran. Spot gold was down 1.6% at $4,433.85 per ounce as of 9 a.m. EDT (1300 GMT), after falling to its lowest level since March 30 earlier in the session. U.S. gold futures for June delivery fell 1.6% to $4,431.60. "The biggest influence continues to be the Middle East. There was some lingering optimism, but as this continues to drag out, that optimism wanes," said Peter Grant, vice president and senior metals strategist at Zaner Metals, adding that the ongoing conflict was heightening inflation concerns. Bullion has been under pressure since the start of the U.S.-Israeli war with Iran in late February. The effective closure of the Strait of Hormuz, a vital passage for one-fifth of the world's oil, has prompted a 31% rise in Brent crude oil prices, fanning inflation woes and propelling expectations of interest rate hikes by central banks around the world.

Iran has obtained a draft of an initial unofficial framework for a memorandum of understanding with the U.S., under which Tehran would restore commercial shipping through the Strait of Hormuz to pre-war levels within a month, while the U.S. would withdraw military forces and lift a naval blockade, Iran's state TV reported. Gold prices briefly pared some losses after this report. However, the market still sees energy-driven inflation prompting the U.S. Federal Reserve to hike its benchmark overnight interest rate by 25 basis points by the end of this year. Despite being an inflation hedge, non-yielding gold struggles in high rate environments. Minneapolis Fed President Neel Kashkari said the U.S. central bank must focus on containing inflationary risks that appear to be building, though it was "far too soon" to predict when it could change its current policy rate. Investors are turning their attention to U.S. data due to be released later this week, including the U.S. Personal Consumption Expenditures Price Indexfor April, for clues on the monetary policy path.

Spot silver fell 3.2% to $74.46 per ounce, platinum slid 2.1% to $1,916.60, and palladium was up 0.6% at $1,387.54. (Reporting by Anjana Anil in Bengaluru; Editing by Paul Simao)