July 30 (Reuters) - Gold rose on Thursday as a softer U.S. dollar lent support, while investors weighed the Federal Reserve's decision to keep interest rates unchanged and monitored escalating tensions in the Middle East that could stoke inflationary pressures.
Spot gold rose 0.3% to $4,076.52 per ounce by 1131 GMT. U.S. gold futures for August delivery gained 1% to $4,074.30.
"The move (for gold) is primarily driven by a weaker U.S. dollar, with markets modestly adjusting their expectations on the next Fed moves," UBS analyst Giovanni Staunovo said.
The U.S. dollar index softened 0.2%, making greenback-priced bullion more affordable for buyers overseas.
The Fed on Wednesday left its benchmark rate in the 3.50%-3.75% range, while U.S. central bank chief Kevin Warsh pledged an unwavering commitment to bring inflation down. Spot gold prices rose about 2% after the policy decision.
Meanwhile, the U.S. military said it struck dozens of Islamic Revolutionary Guard Corps targets in Iran, in retaliation for Tehran firing ballistic missiles at U.S. troops in Jordan on Wednesday.
Brent crude prices climbed more than $1 a barrel on Thursday.
"To see gold rising, we need an improvement in investment demand and that requires market participants to shift expectations towards rate cuts," Staunovo said.
Despite being known as an inflation hedge, higher-for-longer rates tend to diminish bullion's appeal due to its non-yielding characteristic.
Traders are pricing in about a 63% chance of a rate hike at the Fed's September meeting, down from about 77% before the Fed meeting on Wednesday, according to the CME FedWatch Tool. FEDWATCH
Investors now await June U.S. Personal Consumption Expenditures (PCE) data, due at 1230 GMT.
Elsewhere, India has seen a rise in unofficial gold inflows since the government raised import tariffs on the precious metal earlier this year, the World Gold Council said.
Among other metals, spot silver <XAG=> rose 0.6% to $58.00 per ounce, platinum gained 0.7% to $1,622.53, and palladium climbed 3% to $1,283.70.
Reporting by Sukanya Mitra in Bengaluru; Editing by Ronojoy Mazumdar
