(Recasts for EMEA market open)

* Central banks hold rates steady

* UBS expects gold to rebound long-term

* Iran threatens retaliation if U.S. renews attacks

By Anjana Anil

May 1 (Reuters) - Gold prices fell more than 1% on

Friday and were headed for a weekly loss of a similar magnitude,

as elevated oil prices continued to fan inflation concerns that

would discourage central banks from cutting interest rates.

Spot gold was down 1.1% at $4,568.82 per ounce at

0952 GMT, and on track for a weekly loss of 1.2%. U.S. gold

futures for June delivery fell 1.1% to $4,579.70.

"Gold remains negatively correlated to oil in the short

term, as it impacts interest rate expectations," said UBS

analyst Giovanni Staunovo.

Iran said on Thursday it would respond with "long and painful

strikes" on U.S. positions if Washington renewed attacks,

reiterating its claim to the Strait of Hormuz.

Brent crude prices have touched double the levels seen at

the start of the year, raising concerns about a global economic

slowdown and higher inflation as fuel prices surge.

U.S. inflation accelerated in March as the war raised gasoline

prices, reinforcing expectations that the Federal Reserve could

keep interest rates on hold well into next year.

The European Central Bank and the Bank of England left interest

rates unchanged on Thursday, following similar decisions this

week by the Fed and the Bank of Japan.

Gold, traditionally seen as a hedge against geopolitical

uncertainty and inflation, can come under pressure in a high

interest rate environment as it loses its appeal to

yield-bearing assets like U.S. Treasuries.

However, Staunovo said UBS retained a constructive outlook

over the next 6 to 12 months. "Uncertainty surrounding upcoming

(U.S.) midterm elections, expectations of a weaker U.S. dollar

over time, and declining real interest rates (as the Fed cuts)

will likely support investment demand alongside continued

central bank demand."

He added that these factors could drive prices towards

$5,900/oz by late 2026.

Spot silver prices fell 0.6% to $73.27 per ounce,

platinum was down 1.3% at $1,960.30, and palladium

lost 0.6% to $1,515.37.