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Markets in wait-and-see mode on Iran's response

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Shares slip in Asia; oil prices briefly hit 5-month highs

(Adds comments, updates for Asia morning session)

By Brijesh Patel

June 23 (Reuters) - Gold prices edged lower on Monday as

investors favoured the dollar following the U.S. attack on key

Iranian nuclear sites over the weekend, with markets closely

watching for Iran's response.

Spot gold was down 0.2% at $3,362.29 an ounce, as of

0341 GMT. U.S. gold futures fell 0.2% to $3,378.

"The US strikes on Iranian nuclear facilities resulted in

the dollar receiving safe haven buying flows in the currency

market," KCM Trade Chief Market Analyst Tim Waterer said.

"This USD uptick had pegged gold back and caused an

uncharacteristically subdued performance from the precious metal

despite risks stemming from the conflict."

The dollar rose rose 0.2% against its rivals, making

gold more expensive for other currency holders.

U.S. President Donald Trump on Sunday raised the question of

a regime change in Iran following U.S. strikes against key

military sites over the weekend, as senior officials in his

administration warned Tehran against retaliation.

Iran vowed to defend itself a day after the U.S. dropped

30,000-pound bunker-buster bombs onto the mountain above Iran's

Fordow nuclear site.

Meanwhile, Iran and Israel continued to trade volleys of

missile attacks. An Israeli military spokesperson said Israeli

fighter jets had struck military targets in western Iran.

Shares slipped in Asia on Monday and oil prices briefly hit

five-month highs, but there were no signs of panic selling

across markets.

The Federal Reserve's latest monetary policy report to

Congress, released on Friday, said U.S. inflation remained

somewhat elevated and the labor market was solid.

On the technical front, spot gold may retest support

at $3,348 per ounce, a break below could open the way toward

$3,324, according to Reuters technical analyst Wang Tao.

Elsewhere, spot silver rose 0.2% at $36.07 per ounce,

platinum edged 0.1% higher to $1,269.17, while palladium

gained 0.2% to $1,046.62.