Spot gold prices fell on Tuesday as a stronger dollar offset safe-haven demand driven by an escalating U.S.-Israeli air war against Iran that has heightened geopolitical and economic uncertainty.Spot gold was down 1.4% at $5,252.05 an ounce by 0931 GMT. U.S. gold futures for April delivery lost 0.9% to $5,263.80.The U.S. dollar rose to a more than one-month high, supported by firm demand and cautious market sentiment.A stronger U.S. currency typically makes dollar-denominated commodities such as gold more expensive for buyers with other currencies.“The price decline is likely due to the market now placing greater weight on the inflationary risks resulting from the war in the Middle East and therefore raising its interest rate expectations. This also explains why the U.S. dollar continues to gain ground,” said Thu Lan Nguyen at Commerzbank.Gold, a non-yielding asset, tends to perform well when interest rates are lower.Traders expect the U.S. Federal Reserve to hold rates at the end of its next two-day meeting on March 18, according to the CME Group’s FedWatch tool. The odds of a June hold, previously below 45%, edged up to more than 60%.Global oil and gas shipping rates soared, stoking inflation fears, after an official from Iran’s Revolutionary Guards said on Monday that the Strait of Hormuz is closed to marine traffic and the country will fire on any ship trying to pass.Israeli Prime Minister Benjamin Netanyahu said on Monday that the U.S. and Israel’s war against Iran may take “some time” but it will not take years.Many analysts remain bullish on gold, including BMI, a unit of Fitch Solutions, which said that the metal could reach a record high above $5,600 an ounce this week unless there are signs of de-escalation in the conflict.“In an environment where geopolitical risks intersect with inflationary pressures and monetary policy complexities, gold becomes a tool for reallocating risk within investment portfolios,” said XS.com analyst Rania Gule.In other precious metals, silver fell 6.5% to $83.63 an ounce after climbing to a more than four-week high on Monday. Platinum lost 7.5% to $2,131.30 and palladium was down 4.1% at $1,694.75.