Gold was on track for its biggest weekly loss in six on Friday, as escalating US-Iran clashes lifted oil prices, adding to inflationary pressures and strengthening the case for higher US interest rates. Spot gold was up 0.8% at $4,002.39 per ounce by 0624 GMT, having touched its lowest since July 1 earlier in the day. US gold futures for August delivery gained 0.4% to $4,006.10. The metal has lost 3% so far this week, its largest decline since June 1, with the Middle East conflict outweighing support from softer June US inflation figures released this week. "Gold is making tentative steps higher today after the sight of the metal slipping below $4,000 attracted some bargain hunting," said Tim Waterer, chief market analyst at KCM Trade. However, "geopolitical risks in the Middle East are still present, with inflation and yield concerns being the dominant forces holding gold back," Waterer said. Oil prices have climbed about 12% this week as the escalating US-Iran conflict raised supply concerns. The surge in oil prices risks reigniting inflation worries and increasing the likelihood of interest rate hikes. Non-yielding gold typically struggles in a high-interest-rate environment, as investors gravitate towards assets offering higher returns. Dallas Federal Reserve President Lorie Logan became the first of Fed Chairman Kevin Warsh's new colleagues to call publicly for a rate hike. Fed Vice Chair Philip Jefferson also suggested he would be open to raising rates if there is no near-term improvement in inflation. Traders are pricing in a 73% chance of a rate hike in December, according to the CME FedWatch Tool. Gold discounts in India widened to a one-month high this week as hopes of lower prices kept buyers on the sidelines, while premiums in China were largely steady. Elsewhere, spot silver rose 0.6% to $55.83 per ounce, while platinum lost 1% to $1,602.02 and palladium eased 0.4% to $1,244.84. All three metals were headed for a weekly loss.
