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 fell 0.1% to $55.45 per ounce, platinum dipped 1.9% to $1,586.63 and palladium slid 1% to $1,237.47. All three metals were headed for a weekly loss.

Gold was on track for its biggest weekly loss in six on Friday, as escalating U.S.-Iran clashes lifted oil prices, adding to inflationary pressures and strengthening the case for higher U.S. interest rates.

Spot gold was up 0.6% at $3,993.22 per ounce by 0758 GMT, having touched its lowest since July 1 earlier in the day. U.S. gold futures for August delivery gained 0.1% to $3,996.90.

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 U.S. 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 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.