PRECIOUS-Gold rises?but face third straight weekly drop on higher rate outlook

(Updates for US morning hours)

* Spot gold hit its lowest level since February 2 on Thursday

* Silver, platinum and palladium head for weekly fall

By Ashitha Shivaprasad

March 20 (Reuters) - Gold prices firmed on Friday but remained on course for a third consecutive weekly decline, due to expectations of a hawkish stance from major central banks amid inflationary risks spurred by the Middle East conflict.

Spot gold rose 0.6% to $4,674.29 per ounce as of 9:01 a.m. ET (1301 GMT), on bargain-hunting after prices hit their lowest level since February 2 in the previous session.

U.S. gold futures for April delivery rose 1.5% to $4,675.20. Major global brokerages see a higher likelihood of the European Central Bank and Bank of Englandraising interest rates, potentially as early as April. The Federal Reserve held interest rates steady on Wednesday and projected higher inflation, while Chair Jerome Powell said future policy path was subject to unusually high uncertainty due to the war.

"The war is providing some haven support, but that's secondary. The prospects of the Fed staying on hold into 2027 is creating a headwind for gold," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

"A move back above $4,800 would ease some of the downside pressure and suggest potential for a move toward $5,000. I don't see a breakout from the current range anytime soon, but when it does happen, I think the move will ultimately be to the upside."

Gold is considered a hedge against inflation and uncertainty, but higher interest rates curb the non-yielding asset's appeal. The war against Iran has killed thousands, spilled across the Middle East, and hit the global economy, since the U.S. and Israel launched their joint attack on February 28. Iran's prolonged blockade of the Strait of Hormuz could keep energy prices elevated and raise inflation.

Elsewhere, in India, gold discounts eased, helped by festive buying and correction in prices, while premiums in China declined as physical demand softened.

Spot silver fell 1.1% to $72.08. Platinum rose 0.5% at $1,981.53 and palladium added 0.4% to $1,450.84. All three metals were on track for weekly declines. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Leroy Leo)