PRECIOUS-Gold rises on dip-buying but heads for fourth weekly loss

By Ishaan Arora

March 27 (Reuters) - Gold rose on Friday on bargain-hunting but remained on track for a fourth straight weekly loss, as the U.S.-Israel war with Iran stoked inflation concerns, lifted the dollar and reinforced expectations of higher interest rates.

Spot gold XAU= rose 1.1% to $4,425.39 per ounce as of 1018 GMT. Gold was set for a weekly loss of 1.4% so far having touched a four-month low of $4,097.99 on Monday. U.S. gold futures GCcv1 for April delivery gained 1% to $4,421.30.

"The initial knee-jerk liquidity needs have been met, and now gold is able to perform," said Nitesh Shah, commodity strategist at WisdomTree. "Savvy investors have been using the dip in prices as an opportunity to build."

Brent crude rose to nearly $110 a barrel, even as U.S. President Donald Trump extended a pause in attacks on Iran's energy plants for 10 days. O/R

The U.S. has also sent thousands of troops to the Middle East, with Trump weighing whether to use ground forces to seize Iran's strategic oil hub of Kharg Island .

Since the war began, oil prices have surged, fuelling inflation concerns that would typically support bullion as an inflation hedge. However, higher interest rates tend to weigh on non-yielding gold.

"Bullion is trying to rebound after the recent selloff, but it is clear that we will remain in volatile territory until there is more clarity about the U.S.-Iran situation," said Swissquote analyst Carlo Alberto De Casa.

Softer bullion prices attracted some buying in India this week, though many held off in anticipation of a further price drop. GOL/AS

Meanwhile, the Turkish Central Bank's gold reserves posted their largest weekly drop since August 2018 amid fallout from the Iran war.

Spot silver XAG= rose 1.1% to $68.74 per ounce. Spot platinum XPT= gained 2.5% to $1,872.87, while palladium XPD= rose 1.7% to $1,376.66.