Oct 20 (Reuters) - Gold edged lower on Tuesday as rising oil prices stoked inflation concerns, with investors looking to next week's Federal Reserve meeting for clues on the US interest-rate outlook.
Spot gold fell 0.5% to $4,120.87 per ounce by 1103 GMT. U.S. gold futures for December delivery dropped 0.5% to $4,139.90 per ounce.
"Persistent inflationary pressures, driven by high energy prices, continue to support expectations of further monetary tightening by the Federal Reserve," said Ricardo Evangelista, ActivTrades director and CEO.
Oil prices advanced on Tuesday, with Brent hovering around a five-month high as traders priced in geopolitical risks from Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf.
"The Fed is widely expected to leave interest rates unchanged in October, so the main focus will be on its guidance regarding a possible increase in December," Evangelista added.
Recent comments from Fed officials signalling little urgency for further policy tightening have tempered expectations of a rate hike at the central bank's October 27-28 policy meeting, but traders see a 92% chance of a hike in December, according to CME's FedWatch Tool., opens new tab
Although gold is traditionally considered an inflation hedge, higher rates dent its appeal as investors prefer yield-bearing assets.
The US Personal Consumption Expenditures (PCE), the central bank's preferred inflation gauge, due next week is also on investors' radar for clues on the interest-rate outlook.
Elsewhere in Japan, central bank Governor Kazuo Ueda said underlying inflation was "quite close" to the 2% target, signalling scope for further rate hikes.
Among other metals, spot silver was steady at $57.0974 per ounce, platinum edged 0.1% lower to $1,639.36 per ounce and palladium dropped 1.1% to $1,107.61 per ounce.
Reporting by Vishak Mathew in Bengaluru; Editing by Harikrishnan Nair and Leroy Leo
