(Updates for US morning trade)

* Oil dips after Iran says 30 vessels crossed Strait of

Hormuz

* Mishandling of Taiwan could spark conflict, Xi tells

Trump

* US retail sales increase again in April

By Ishaan Arora

May 14 (Reuters) - Gold prices edged down on Thursday

while investors focused on the latest developments in the Middle

East war and signals from U.S. President Donald Trump's meeting

with Chinese President Xi Jinping.

Spot gold was down 0.4% at $4,668.34 per ounce at

9:42 a.m. EDT (1342 GMT). U.S. gold futures for June

delivery fell 0.7% to $4,672.70.

The U.S. dollar was up 0.1%, making greenback-priced metals

more expensive for holders of other currencies.

Oil prices dipped after Iran's state media said about 30 vessels

had crossed the Strait of Hormuz in recent hours. Gold prices

briefly gained after this report.

"There is risk of a significant downturn (in gold) if this

Middle East conflict isn't resolved," said Bart Melek, global

head of commodity strategy at TD Securities. Inventories and

supply of energy products could be reduced to the point where

prices rise sharply, leading to a rise in overall inflation, he

added.

U.S. interest rate cuts have been largely priced out at any

point this year, according to CME Group's FedWatch tool, due to

a sharp energy-driven rise in U.S. producer and consumer prices

in April.

While gold is considered a hedge against inflation, higher

interest rates tend to weigh on the non-yielding metal.

Data released on Thursday showed U.S. retail sales increased

further in April, but some of the rise in receipts was likely

due to higher prices.

Meanwhile, Xi told Trump that trade talks were making

progress at the start of a two-day summit on Thursday, but

cautioned that disagreement over Taiwan could send relations

down a dangerous path and even lead to conflict. The U.S.

summary of the talks, however, made no mention of Taiwan.

Spot silver fell 3.8% to $84.62 per ounce, platinum

fell 3.4% to $2,065.50, and palladium was down

3.7% at $1,443.74.