By Pablo Sinha

July 10 (Reuters) – Gold edged lower on Friday and was on track for a weekly fall on concerns that escalating U.S.-Iran ‌tensions could fuel inflation and keep the Federal Reserve on a hawkish ‌monetary policy path.

Spot gold fell 0.1% to $4,115.79 per ounce by 0601 GMT and was headed for a ​1.4% weekly decline. U.S. gold futures for August delivery slipped 0.4% to $4,124.90.

“Gold is in consolidation mode today following yesterday’s gains, with traders hesitant to commit to further upside amid the prevailing uncertainty over US-Iran relations,” said Tim Waterer, chief market analyst at KCM ‌Trade.

Oil prices were on track ⁠for a weekly gain as the U.S. and Iran continued to trade strikes, with Iranian armed forces launching attacks on U.S. ⁠military infrastructure in Gulf states on Thursday following U.S. strikes on Iran’s southern coastal and eastern provinces. [O/R]

The latest round of strikes has fuelled inflation concerns and reinforced the probability ​of the ​Fed raising rates this year.

Markets are pricing ​in a 63% chance of a ‌September rate hike, up from around 54% a week earlier, according to CME’s FedWatch tool. [FEDWATCH/]

While gold is typically seen as a hedge against inflation, it loses its appeal as a non-yielding asset in a high-interest-rate environment.

“I expect gold will continue to attract buyers on dips as long as oil stays around current levels. However, any ‌sharp spike in oil could reignite inflation and ​interest rate fears, which would be to gold’s ​detriment,” Waterer said.

Minutes of the ​Fed’s June meeting, released earlier this week, showed growing concerns among ‌policymakers about elevated inflation.

HSBC cut its ​average gold price forecasts ​for 2026 and 2027 on Thursday, citing a hawkish shift in U.S. monetary policy expectations and a stronger dollar.

Elsewhere, spot silver rose 0.3% to $60.19 per ​ounce, platinum gained 1.4% to $1,632.99 ‌and palladium climbed 1.9% to $1,270.54. All three metals were on track ​for a weekly loss.

(Reporting by Pablo Sinha and Swati Verma in Bengaluru; ​Editing by Sherry Jacob-Phillips and Subhranshu Sahu)