Gold heads for biggest weekly loss in six as Middle East war fans inflation worries

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 XAG= rose 0.6% to $55.83 per ounce, while platinum XPT= lost 1% to $1,602.02 and palladium XPD= eased 0.4% to $1,244.84. All three metals were headed for a weekly loss.

"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 U.S.-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.