(Updates prices as of 0718 GMT)

* Oil prices rise more than 3%

* Israeli PM orders troops to move further into Lebanon

* Gold still has potential to hit $5,500 by 2026-end,

says analyst

By Pablo Sinha

June 1 (Reuters) - Gold prices fell on Monday, pressured

by a stronger dollar and rising crude oil prices, as investors

awaited U.S. President Donald Trump's decision on a proposed

deal to extend the ceasefire with Iran.

Spot gold was down 0.7% at $4,505.87 per ounce, as of

0718 GMT, after hitting a two-week high in the previous session.

U.S. gold futures for August delivery fell 1.2% to

$4,535.90.

The dollar rose, making greenback-priced bullion more

expensive for holders of other currencies.

"Oil's uptick in price, combined with the still-elusive

U.S.-Iran deal, is just enough to keep gold off balance at the

start of the week," said Tim Waterer, chief market analyst at

KCM Trade.

Trump said on Friday he would soon decide on a proposed deal to

extend the ceasefire with Iran, though the two countries still

appeared to differ on significant issues that have been central

to the conflict.

The U.S. said it struck Iranian military sites over the weekend,

and Iran's Revolutionary Guards said on Monday it had targeted a

U.S. base in response.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu ordered

troops to move further into Lebanon in the battle against the

Iranian-backed Hezbollah militant group, despite a ceasefire

announced more than six weeks ago.

Oil prices rose more than 3% on Monday, stoking concerns

around inflation and interest rate hikes.

While gold is traditionally seen as a hedge against inflation,

it loses its appeal in a high-interest-rate environment as a

non-yielding asset.

Federal Reserve Vice Chair for Supervision Michelle Bowman said

on Friday thatthe impact of the war in the Middle East on the

economy, while still measured, could lead to

persistent inflation that might require tighter monetary policy.

"By the end of 2026, gold still has potential to hit $5,500

should favourable circumstances arise, notably lower oil prices

and a depreciation of the dollar, underpinned by continued

robust central bank buying and its role as a geopolitical and

inflation hedge," Waterer said.

Spot silver rose 0.7% to $75.80 per ounce, platinum

gained 1% to $1,935.65, and palladium rose 0.5% to

$1,360.93.