* Gold down 2% so far this month

* US inflation gained at its fastest pace in 3 years in

April

* Oil futures down more than 1% on Friday

(Rewrites for Europe market open)

By Anjana Anil

May 29 (Reuters) - Gold gained on Friday on hopes of a

potential U.S.-Iran ceasefire, but prices were on track for a

third straight monthly decline as concerns about energy-driven

inflation bolstered expectations of a rate hike.

Spot gold was up 0.8% at $4,528.19 per ounce, as of

1005 GMT. Bullion fell to a two-month low of $4,365.76 on

Thursday, but closed higher.

The metal has fallen 2% so far this month.

U.S. gold futures for August delivery rose 0.6% to

$4,559.10.

"Gold remains negatively correlated to oil, which impacts

inflation and monetary policies. Lower oil prices reduces the

probability of rate hikes, which is positive for gold," said UBS

analyst Giovanni Staunovo.

Oil futures fell more than 1% and were on track for their

steepest weekly decline since early April, after reports that

the U.S. and Iran reached an agreement on Thursday to extend

their ceasefire and lift restrictions on shipping through the

Strait of Hormuz.

However, U.S. President Donald Trump is yet to approve the

agreement and Iranian state media said it had not been

finalised.

U.S. inflation increased at its fastest pace in three years

in April, driven by higher energy prices due to the Iran war.

The surging prices cemented economists' views that the Federal

Reserve would hold interest rates unchanged well into next year,

with some even expecting a rate hike by the end of this year.

While gold is considered a hedge against inflation, the

non-yielding asset tends to come under pressure in

high-interest-rate environments.

"May 2026 marked a period of consolidation across global

markets following a turbulent first quarter. While geopolitical

tensions and inflation concerns continued to influence

sentiment, easing safe-haven demand and a firmer interest-rate

outlook pressured precious metals during the month," precious

metals trading firm Rotbart & Co wrote in a client note.

Spot silver fell 0.2% to $75.51 per ounce and

platinum lost 0.3% to $1,917.96. Palladium gained

0.4% to $1,373.88. Platinum was headed for a monthly loss, while

silver and palladium were on track for monthly gains.