June 12 (Reuters) - Gold steadied on Friday as oil fell on rising hopes for a peace deal between Iran and the United States, but prices remained on track for a second straight weekly decline due to expectations of higher interest rates.
Spot gold was little changed at $4,207.30 per ounce as of 1106 GMT, but was down more than 2% for the week.
U.S. gold futures rose 2.8% to $4,227.40.
"Gold prices are moving in line with statements from the U.S. President, but the overriding influence remains inflation, with markets expecting rate hikes from the ECB and also anticipating that the Fed will follow," said Quantitative Commodity Research analyst Peter Fertig.
"Gold's price move will depend on how steep the increase in inflation rate is. If we see a further acceleration in the coming months, the $4,000 handle could be broken to the downside."
U.S. President Donald Trump said a deal with Iran could be signed as soon as this weekend, even as Tehran said it had not made a final decision on a pact. Oil prices extended losses from the previous session on the news.
Gold has been under strain since the Iran conflict began, with worries that surging energy costs may drive inflation higher, reinforcing expectations that central banks will keep interest rates elevated, thereby increasing the opportunity cost of holding non-yielding bullion.
ANZ lowered its year-end price target for gold by $400 to $5,200 to reflect recent price volatility.
Data this week showed that U.S. producer prices increased more than expected in May, while consumer inflation jumped above 4% in May for the first time in three years.
Focus is also on the Federal Reserve's policy-setting committee that meets on June 16-17. It is the first policy meeting led by new Fed Chair Kevin Warsh.
Among other metals, spot silver fell 0.7% to $66.90 per ounce and platinum lost 0.3% at $1,715.05, with both metals headed for a weekly loss.
Palladium <XPD=> rose 2.6% to $1,302.55, and was headed for a weekly gain.
Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Janane Venkatraman and Jonathan Ananda
