Sept 14 (Reuters) - Gold fell to a more than one-month low on Monday, as a rally in oil prices and stronger-than-expected inflation data on Friday bolstered expectations of a rate hike at the U.S. Federal Reserve's policy meeting this week.
Spot gold was down 0.8% at $4,312.59 per ounce by 1:30 p.m. EDT (1730 GMT), after having fallen to its lowest since August 7. U.S. gold futures were 1.3% lower at $4,351.90.
"We've got crude oil prices that are sharply higher today, which is driving inflation expectations that suggest the major central banks of the world are going to have to tighten their monetary policies to control inflation, and that's bearish for the metals," said Jim Wyckoff, a market analyst at American Gold Exchange.
A majority of economists polled by Reuters expect the Federal Reserve to raise its interest rate on Wednesday and deliver at least one more hike by the end of March, reversing a fragile no-change consensus that prevailed before official data on Friday showed firm inflation.
The Consumer Price Index increased 0.4% last month after edging up 0.1% in July, the labor department's Bureau of Labor Statistics said on Friday.
Traders are pricing in about a 93% chance of a rate hike at the Federal Reserve's policy meeting, according to the CME FedWatch Tool.
The Bank of Japan is also expected to raise interest rates on Friday, amid rising energy prices and little sign of easing Middle East tensions.
Although gold is typically seen as an inflation hedge, higher interest rates tend to reduce the appeal of the non-yielding bullion.
Oil prices rose about 4% earlier on Monday, after new strikes on Saudi Arabian energy and civilian infrastructure and Iranian attacks on ships in the Gulf compounded supply concerns following the closure of a key Saudi oil pipeline.
Middle East diplomacy appeared to falter with the postponement of a meeting between Iran and other Gulf powers.
The dollar rose to a two-week high, making greenback-priced bullion more expensive for holders of other currencies.
Among other metals, spot silver slid 1.2% to $63.71 per ounce, platinum dipped 1.6% to $1,768.17 and palladium fell 0.7% to $1,290.41.
Reporting by Pablo Sinha in Bengaluru; Editing by Diti Pujara and Jonathan Ananda
