* Trump calls Iran's response to US peace proposal

'unacceptable'

* Brent crude oil rises above $103 a barrel

* Trump, Xi to discuss Iran among other topics later this

week

* U.S. April CPI data due on Tuesday

(Rewrites to EMEA morning trading)

By Noel John

May 11 (Reuters) - Gold fell 1% on Monday, as elevated

oil prices stoked worries over inflation and prolonged high

interest rates, while peace talks between the United States and

Iran remained unsolved.

Spot gold fell 1% at $4,667.99 per ounce, as of 0852

GMT. U.S. gold futures for June delivery lost 1.1% at

$4,677.80.

The dollar rose, making greenback-priced bullion more

expensive for holders of other currencies.

U.S. President Donald Trump on Sunday rejected Iran's

response to a U.S. proposal for peace talks to end the war,

saying Tehran's demands were "totally unacceptable."

Brent crude oil prices rose above $103 a barrel amid

concerns the 10-week-old conflict will drag on, keeping shipping

through the Strait of Hormuz paralyzed.

"Inflation risks still weigh heavy on the market's

collective mind, as attempts to end the Middle East conflict

reached an impasse after the U.S. and Iran rejected each other's

peace proposals," said Han Tan, chief market analyst at Bybit.

Gold prices have fallen more than 11% since the war began in

late February, pressured by higher oil prices. Elevated crude

oil prices can stoke inflation, increasing the likelihood of

higher interest rates. While gold is seen as an inflation hedge,

high rates tend to weigh on the non-yielding asset.

Traders have largely priced out U.S. Federal Reserve rate

cuts this year, with markets now seeing a 31% chance of a hike

by March 2027, according to CME Group's FedWatch tool.

Investors will eye Trump's meeting with Chinese President

Xi Jinping on Wednesday as the Gulf will be on the agenda.

They will also looking out for April's U.S. Consumer Price

Index data on Tuesday, for further clues on the Fed's monetary

policy direction.

"Gold may face greater downward pressure should tomorrow's

U.S. CPI prints come in hotter than expected, in turn forcing

the Fed to keep its benchmark rates elevated for a longer period

of time," Tan said.

Spot silver was steady at $80.34 per ounce, platinum

slid 1.6% to $2,022.93, and palladium was down

1.1% at $1,475.55.