By Noel John
March 12 (Reuters) - Gold prices held steady on Thursday, paring an earlier drop of nearly 1%, while a firmer dollar and fading hopes for near-term interest rate cuts due to higher oil prices continued to weigh.
Spot gold was down 0.1% at $5,172.86 per ounce as of 0221 GMT. U.S. gold futures for April delivery was unchanged at $5,178.
"Given a lack of a short-term exit for the Middle East conflict right now, plus a de facto closure of the Strait of Hormuz, I think any gold dips will likely
be bid (buying opportunity), since the market lacks a clear reason to sell the metal," said Nicholas Frappell, global head of institutional markets at ABC Refinery.
The U.S. dollar firmed 0.1%, making dollar-priced bullion more expensive for holders of other currencies. [USD/]
Iran said the world should brace for $200-a-barrel oil after its forces struck merchant ships on Wednesday, while the International Energy Agency urged a massive release of strategic reserves to blunt one of the worst oil shocks since the 1970s.
Oil prices jumped in early trade, adding to inflation pressures, as supplies from the Gulf remain constrained amid the U.S.-Israeli war on Iran. [O/R]
Iran has deployed about a dozen mines in the strait, according to sources, a move that could complicate efforts to reopen the narrow waterway, a key route for global oil and liquefied natural gas shipments.
Tankers in the strait have been stranded for more than a week, and producers haved suspended output as storage nears capacity.
In economic data, the U.S. consumer price index rose 0.3% in February, matching forecasts and accelerating from January's 0.2% increase. CPI rose 2.4% in the year to February, also in line with expectations.
Investors are now awaiting the release of January's delayed Personal Consumption Expenditures index on Friday.
Spot silver fell 0.3% to $85.49 per ounce. Spot platinum gained 0.1% to $2,171.19 and palladium rose 0.8% to $1,650.52.
(Reporting by Noel John in Bengaluru; Editing by Sumana Nandy and Harikrishnan Nair)
