* Markets cautious ahead of Trump's midnight deadline for

Iran

* Iran rejects ceasefire deal; Trump ramps up threats

* Fed presidents highlight inflation concerns

* Fed March policy meeting minutes due on Wednesday

(Updates prices as of 0702 GMT)

By Pablo Sinha

April 7 (Reuters) - Gold prices were muted on Tuesday as

nervy investors stayed on the sidelines ahead of a deadline set

by U.S. President Donald Trump for Iran to reopen the Strait of

Hormuz.

Spot gold edged 0.1% higher to $4,651.34 per ounce by

0702 GMT, while U.S. gold futures for June delivery fell

0.2% to $4,676.50.

"Everyone is in a mode where we're waiting for whatever the

outcome is of this diatribe that the president has been on for

the past several days," said Ilya Spivak, head of global macro

at Tastylive.

Iran and Israel traded attackson Tuesday as Tehran defiantly

refused to reopen the strait and accept a ceasefire deal on the

eve of Trump's deadline to agree to his demands or get "taken

out."

Oil extended gains, holding above $110 a barrel.

Elevated oil prices have fuelled global inflation concerns.

While gold typically benefits during periods of inflationary

pressure, higher interest rates reduce its appeal as a

non-yielding asset.

Cleveland Federal Reserve President Beth Hammack and Chicago

Fed President Austan Goolsbee both see inflation as a far bigger

problem than employment, underscoring their support for

maintaining tighter monetary policy.

Markets widely see no chance of a U.S. rate cut this year,

according to the CME's FedWatch tool.

Investors now await minutes of the Federal Reserve's March

policy meeting on Wednesday, as well as U.S. inflation

indicators, including Personal Consumption Expenditures and

Consumer Price Index data later this week.

While traders remained cautious ahead of geopolitical and

inflation catalysts, some analysts said the bull case for gold

remained intact.

"Last year, gold went off on its own and became its own

speculative narrative. We're likely to see that re-emerge this

year after whatever sort of risk washes off here... ultimately

by the end of the year, we could end up closer to $5,500 and

$6,000," Spivak said.

Spot silver fell 0.7% to $72.28 per ounce, platinum

shed 0.8% to $1,964.24 and palladium slid 0.1% to

$1,483.38.