Gold muted as investors weigh chances of further Fed rate hikes

Sept 24 (Reuters) - Gold prices were muted in early Asian trade on Thursday, with investors focussed on the prospect of further Federal Reserve interest rate hikes this year.

FUNDAMENTALS

* Spot gold was flat at $4,285.31 per ounce, as of 0022 GMT. US gold futures for December delivery were little changed at $4,321.40.

* US Treasury prices dropped on Wednesday, pushing yields sharply higher after a stronger-than-expected purchasing managers' report. US/

* Mounting inflation pressures and a strengthening economy appear to be pushing the Fed towards a rate hike on the eve of critical national elections, with traders piling into bets on a second straight policy tightening in late October.

* A closely watched measure of US business activity, S&P Global's flash US Composite PMI Output Index, jumped this month to its highest since July 2021, S&P Global reported. The survey's measure of prices paid by businesses for inputs surged to a nearly four-year high.

* While gold is widely regarded as an inflation hedge, rising interest rates tend to diminish its appeal relative to interest-bearing investments.

* Iran and the United States remain far apart on how to end their war but diplomacy must continue, a senior Iranian official told Reuters, after Iran's president told the UN General Assembly that Tehran would never surrender to US pressure.

* US President Donald Trump welcomed Chinese President Xi Jinping to Washington for a three-day visit where the superpowers' tensions over trade, technology and Tehran will play out against a backdrop of pomp and ceremony.

* Among other metals, spot silver fell 0.6% to $64.08 per ounce, platinum steadied at $1,749.47 and palladium rose 0.2% to $1,261.95.